I Am Turning 62. What Do I Need to Do?

Turning 62 prompts individuals to consider retirement plans. Proactive planning ensures a smoother transition and clearer understanding of options and challenges.

Understanding Social Security Benefits at 62

Age 62 is the earliest eligibility for claiming Social Security retirement benefits. While benefits can be accessed at this age, claiming early results in a permanent reduction compared to waiting until your full retirement age (FRA), typically 66 to 67 based on your birth year.

Your Social Security benefit is primarily determined by your highest 35 years of indexed earnings, adjusted for average wage changes. Higher earnings, up to the annual taxable limit, increase your potential benefit. Your claiming age also impacts the monthly amount.

Claiming Social Security benefits at age 62 permanently reduces your primary insurance amount (PIA). For example, if your full retirement age is 67, claiming at 62 can reduce your monthly benefit by about 30%.

Conversely, delaying benefits past your full retirement age, up to age 70, earns delayed retirement credits. Your monthly benefit increases by approximately 8% for each year you wait.

If you claim Social Security benefits before full retirement age and continue to work, an annual earnings limit applies. Exceeding this limit temporarily withholds benefits. For 2025, if under FRA all year, the Social Security Administration withholds $1 for every $2 earned above $22,320.

In the year you reach full retirement age, a different, less severe earnings limit applies. For 2025, the limit before FRA is $59,520, with $1 withheld for every $3 earned above it. Once you reach FRA, the earnings limit no longer applies.

Create an online account on SSA.gov to understand your personal benefit estimates. The portal provides your Social Security Statement with estimated benefit amounts at different claiming ages, helping you make informed decisions.

Before applying for Social Security benefits, gather these documents:
Your Social Security card
Original birth certificate or a certified copy
W-2 forms or self-employment tax returns from the previous year
Your bank account information for direct deposit

Apply for Social Security benefits online via SSA.gov, which guides you through the process. You can also apply by phone or schedule an in-person appointment at a local Social Security office.

After submitting your application, the Social Security Administration will send a confirmation. Processing typically takes weeks to months. The SSA may contact you for additional information. Once approved, you’ll receive notification of your benefit amount and payment start date.

Assessing Your Retirement Financial Picture

At age 62, inventory all financial resources beyond Social Security. This includes retirement accounts (401(k)s, 403(b)s, IRAs), pension plans, and taxable investment accounts (brokerage accounts, mutual funds, CDs).

Other assets like real estate, annuities, or business interests also contribute. Understanding their value and accessibility provides a comprehensive view of your total retirement wealth, aiding lifestyle planning.

A realistic retirement budget estimates future income and expenses. Income sources include Social Security, pension payments, rental income, part-time work, and investment income from taxable accounts or annuities.

Project anticipated living costs: housing, utilities, food, transportation, and discretionary spending. Account for changes in spending habits, like increased travel or new hobbies, and decreased work-related expenses. A detailed budget helps determine if projected income covers expenses.

Though not directly applicable at age 62, understand retirement account withdrawal strategies. The “4% rule” suggests withdrawing 4% of your initial portfolio balance, adjusted for inflation, may allow savings to last throughout retirement.

Consider sequence of returns risk: the negative impact of poor investment returns early in retirement on portfolio longevity. Also, be aware of Required Minimum Distributions (RMDs), which typically apply from age 73 for most retirement accounts.

Addressing debt is crucial for retirement. High-interest debts like credit card balances or personal loans burden income. Develop a strategy to reduce or eliminate these debts to free up financial resources and reduce stress. Consider paying off mortgage debt before retirement to eliminate monthly housing payments.

Review or establish estate planning documents for peace of mind. A will dictates asset distribution and designates guardians. Trusts offer sophisticated control over asset distribution, potentially avoiding probate. A power of attorney grants someone authority to make financial or healthcare decisions if you become unable.

Planning for Healthcare Coverage

Planning for healthcare coverage is important as Medicare eligibility begins at age 65. For those turning 62, securing coverage until Medicare eligibility is crucial. Several options exist to bridge this gap, ensuring continuous access to medical services.

If employed at age 62, your employer-sponsored health plan is often a straightforward option. These plans offer comprehensive coverage and may include employer contributions. Remaining on an employer’s plan provides stable coverage until Medicare eligibility.

For those leaving employment, COBRA continuation coverage may extend health benefits from a former employer’s plan. While expensive (full premium plus administrative fee), COBRA provides seamless coverage for up to 18 months, maintaining your previous benefit level.

The Health Insurance Marketplace (ACA) is another option for coverage between ages 62 and 65. It offers various health plans; income-dependent premium tax credits can significantly reduce costs. Marketplace plans cover essential health benefits like doctor visits, hospital stays, and prescription drugs.

If married, spousal coverage through your spouse’s employer-sponsored health plan is a viable option. You can be added to their plan, providing coverage until Medicare eligibility. Cost and availability depend on the employer’s plan rules.

Understand Medicare basics for future planning, though eligibility is typically age 65. Medicare has several parts: Part A (Hospital Insurance) covers inpatient stays, skilled nursing, hospice, and some home health. Part B (Medical Insurance) covers doctor services, outpatient care, medical supplies, and preventive services.

Part C (Medicare Advantage Plans) is a private alternative to Original Medicare (Parts A and B), often including Part D (prescription drug coverage) and additional benefits like vision, hearing, and dental. Part D adds prescription drug benefits via private insurers. The initial Medicare enrollment period begins three months before your 65th birthday, includes your birthday month, and extends for three more months.

Understand Medicare’s potential out-of-pocket costs: premiums, deductibles, co-pays, and co-insurance. While most don’t pay a Part A premium, Part B typically has a monthly premium. Many consider purchasing supplemental Medigap policies from private companies to help cover these expenses.

Estimating future healthcare expenses is crucial. Costs can be substantial and unpredictable, including Medicare premiums, out-of-pocket expenses, and long-term care needs. Research average healthcare costs, including assisted living or nursing home care, for a realistic financial outlook. Plan for these expenses to ensure adequate preparation.