Steps to Retire at 62: A Year-by-Year Checklist

The median retirement age in America is 62. That is three years before Medicare starts. This figure comes from the Transamerica Center for Retirement Studies, as reported by KFF Health News, and those three years are where many plans hold up or fall apart. So which steps to retire at 62 actually matter? There are five, and they go in this order:

1. Know what you spend each month.
2. Test whether your savings can last until 95, not just 85.
3. Build a health coverage bridge from 62 to 65.
4. Decide when to claim Social Security, knowing the cut is permanent.
5. Manage your taxable income every year until Medicare starts.

Most guides give you these as a list of topics. Here they are in the order you'd actually do them.

The Year-by-Year Checklist at a Glance

Ages 57–59: Run the Real Numbers

Find out what you actually spend

According to EBRI's 2025 Retirement Confidence Survey, 48% of workers have never estimated how much they'll need each month in retirement. They're guessing. (Source: EBRI/Greenwald Retirement Confidence Survey 2025, Fact Sheet 3.)

Don't guess. Look at 12 months of bank and card statements. Separate essentials from extras. Then add the costs that change after you leave work: health insurance premiums, travel, and the commuting and work spending you'll no longer have. Your monthly spending figure is the most important number in your plan.

Test your savings against odds, not averages

Rules of thumb vary a lot. Boldin suggests about 28–30 times your annual spending if you retire at 62. Other sources use multiples of salary. These are useful for a quick check, but they can't tell you whether your money lasts.

A better question is how often it lasts. Morningstar's 2025 research puts the safe starting withdrawal rate at 3.9%, judged by whether money is still left in 90% of simulated outcomes over a 30-year retirement. (Source: Morningstar, The State of Retirement Income 2025, Dec 2025.) Here's an illustration, not a recommendation: $800,000 at 3.9% is about $31,200 in the first year.

That "90% of outcomes" idea comes from a Monte Carlo test. In plain terms, it runs your plan through many possible market sequences, good years and bad, in different orders, and counts how many end with money left. You get a success rate, not a single projected balance.

Plan for a long life

According to the Social Security Administration, about one in three 65-year-olds may live to at least 90. (Source: SSA, Retirement Information for Medicare Beneficiaries, 2026.) If you retire at 62, your money may need to last 30 years or more. A plan that stops at 85 is betting against a third of retirees.

Ages 60–61: Build the Bridge

Plan your health coverage from 62 to 65

This is the biggest gap in most plans. Your options:

• A spouse's employer plan. Often the cheapest choice, if you can get it.
• Retiree coverage from your employer. Less common now, but worth asking HR about.
• COBRA. It keeps your current plan, but it usually lasts only 18 months. It can't cover the full three years from 62 to 65 by itself.
• ACA marketplace coverage. This is the main bridge for many early retirees (AARP).

Know the 2026 rules before you count on ACA subsidies. The temporary enhanced premium tax credits expired, so the subsidy "cliff" at 400% of the federal poverty line came back for 2026 (Financial Planning). If your income is just one dollar over that line, you can lose the subsidy entirely. KFF found that older marketplace enrollees, the 62-to-64 group in particular, face the steepest premium increases (KFF). Check the current year's rules when you enroll, because Congress can change them.

Model your Social Security claiming age

If your full retirement age is 67, which applies to anyone born in 1960 or later, claiming at 62 pays 70% of your full benefit. That cut is permanent (SmartAsset, Schwab).

*An illustrative figure. Check your own estimate in your SSA account.

Two things most checklists leave out:

• Your claiming age affects your spouse. If you're the higher earner, claiming at 62 can also lower the benefit your spouse receives as a survivor after you die. Treat it as a decision for the household, not just for you.
• Your claiming age affects your health insurance. Social Security income counts toward the income figure (MAGI, modified adjusted gross income) that sets your ACA subsidy. Claiming at 62 might push you over the cliff. Waiting and drawing on savings first might keep you under it. Few guides look at these two decisions together, but they're connected (Q3 Advisors).

Sort out your 401(k) and pension

Find out your pension's payout options and deadlines. Decide whether to keep your 401(k) where it is or roll it over. You're past 59½, so the 10% early-withdrawal penalty generally isn't an issue. Your decisions now are about taxes and which account you draw from first.

Age 62: The Year You Retire

Choose your last day carefully

If you start Social Security partway through the year, there's a monthly rule. Social Security treats you as retired in any month you earn $2,040 or less and don't perform substantial services (SSA). This can matter more than the annual total in your first year.

Enroll in your health coverage

Line up coverage before your employer plan ends. Losing job-based coverage usually opens a special enrollment window on the marketplace. Don't let it close.

Know the earnings limit if you'll work part-time

In 2026, if you're under full retirement age and collecting benefits, Social Security withholds $1 for every $2 you earn above $24,480. In the year you reach full retirement age, the limit rises to $65,160 and $1 is withheld for every $3 (SSA, Nasdaq).

That money isn't lost. SSA recalculates your benefit upward at full retirement age to credit the withheld months. But it can make your cash flow uneven in the meantime.

Set a withdrawal plan

Decide how much you'll withdraw, from which accounts, and how you'll adjust after a bad market year. It doesn't have to be fixed for life. Write it down so you aren't deciding in a panic.

Ages 63–64: Watch the Income Line

These two years are mostly about managing your income.

• ACA subsidies are set every year. Selling assets with large gains, doing big Roth conversions or starting Social Security can each raise your MAGI. Plan big moves with the subsidy cliff in mind.
• Medicare looks back two years. Medicare premiums generally use your tax return from two years earlier. Your income at 63 can set your premiums at 65. A big conversion or sale right after you retire can lead to income-based surcharges later (IRMAA, the income-related monthly adjustment amount).
• Re-enroll and re-shop. Marketplace plans and prices change each year.

About Three Months Before 65: Medicare

Your Medicare enrollment window opens about three months before the month you turn 65. Sign up on time. Medicare doesn't make health care free, though. Fidelity estimates that a 65-year-old retiring in 2025 will spend $172,500 on Medicare premiums, deductibles and prescriptions over retirement, not counting long-term care. (Source: Fidelity Investments, 2025 Retiree Health Care Cost Estimate, Jul 2025.) Include that in your plan as its own expense.

What This Means for Your Plan

Retiring at 62 is common. But it involves three years without Medicare, a permanent Social Security cut if you claim early, and a long retirement to pay for. The steps to retire at 62 are about putting those risks in order and testing them before they happen.

You can run your own numbers on Monte Climb. Enter three numbers: your age, your savings and your monthly spending. We run them through 1,000 simulated futures and show what share of them stay funded. Plans run to age 95 by default, and Medicare premiums and income-based surcharges are charged year by year rather than as one flat guess. Then you can ask William, our AI planner, the follow-up: "Can I retire at 62?" He shows his work.

It runs in your browser. Nothing is saved until you say so. It's planning software, not advice, and it gives you a probability, not a promise.

Show my answer →

Frequently asked questions

How much of my Social Security do I lose by claiming at 62?

If your full retirement age is 67, which applies to anyone born in 1960 or later, claiming at 62 pays 70% of your full benefit, a 30% cut. The reduction is permanent. It doesn't go back up when you reach 67.

How do I get health insurance if I retire at 62?

The usual options are a spouse's employer plan, retiree coverage from your employer, COBRA (usually only 18 months, so it can't cover the full three years) or ACA marketplace coverage. For 2026, the ACA subsidy cliff at 400% of the federal poverty line returned, so your income level matters a great deal.

Can I work part-time after retiring at 62 and still collect Social Security?

Yes, but in 2026 Social Security withholds $1 for every $2 you earn above $24,480 if you're under full retirement age. The withheld benefits aren't lost. Your benefit is recalculated upward when you reach full retirement age.

How much do I need saved to retire at 62?

Rules of thumb vary, from about 28–30 times annual spending to multiples of salary. A more useful test is whether your savings survive across many simulated futures. Morningstar's 2025 research puts the safe starting withdrawal rate at 3.9% over 30 years, based on money lasting in 90% of outcomes.

Does my income after retiring at 62 affect my Medicare premiums?

It can. Medicare premiums generally use your tax return from two years earlier, so income at 63, from a large Roth conversion or asset sale for example, can trigger income-based surcharges (IRMAA) at 65.