Should You Retire at 62 or 67? The Math May Surprise You

What You Give Up When You Retire Early

Retiring at 62 is the earliest age you can claim Social Security, but doing so permanently reduces your monthly benefit by up to 30 percent compared to waiting until your full retirement age. For someone whose full benefit would be $2,400 a month, that reduction means collecting roughly $1,680 instead, for life.

Beyond Social Security, those five extra working years matter in two directions. You keep contributing to your retirement accounts, and you delay drawing them down. A person with $400,000 saved at 62 who earns a modest 6 percent annual return and adds $10,000 a year would have about $580,000 by 67. That gap directly determines how long your money lasts.

The Hidden Cost of a Longer Retirement

A 62-year-old who lives to 87 needs 25 years of income. A 67-year-old with the same life expectancy needs only 20. That difference has a compounding effect on withdrawal rates. The widely cited 4 percent rule breaks down when the retirement horizon stretches past 25 years, and most financial planners now suggest 3.3 to 3.5 percent for longer timelines. Try the retirement income calculator to see your own numbers.

Healthcare adds pressure too. Medicare eligibility starts at 65, so a 62-year-old retiree faces up to three years of private insurance premiums. Depending on plan and location, that can run $700 to $1,200 a month per person, easily $25,000 to $45,000 out of pocket before Medicare kicks in. That is money that cannot stay invested.

Why the Right Answer Depends on Your Specific Numbers

The 62-versus-67 decision is not universally one-sided. Someone with a pension, significant savings, or a health condition that shortens life expectancy may genuinely be better off retiring early. The calculation is personal, not ideological.

Running your own numbers is the fastest way to cut through the guesswork. A retirement income calculator lets you test different retirement ages, savings balances, contribution rates, and expected returns side by side. Swap 62 for 67, adjust your Social Security estimate, and you can see the monthly income difference in real time, rather than relying on rough rules of thumb.

The current interest rate environment makes this analysis especially relevant. With yields on conservative bond allocations still materially higher than they were a few years ago, the projected income from a balanced portfolio looks meaningfully different than it did in 2021. Small shifts in assumed return rates can add or subtract years of retirement security, which is exactly why plugging in your actual numbers beats any generic benchmark.

A Simple Scenario That Puts It in Perspective

Take a 55-year-old with $350,000 saved, contributing $15,000 a year, expecting a 6.5 percent return. If she retires at 62, she projects roughly $530,000 in savings plus a reduced Social Security benefit of around $1,750 a month. If she works until 67, she projects about $810,000 saved plus her full benefit of $2,500 a month. The monthly income difference in retirement, assuming a 4 percent withdrawal on savings, is over $1,400 a month, every month, for the rest of her life.

That gap may be worth five more years of work for many people. For others, it is not. What matters is seeing the actual numbers for your own situation before making an irreversible choice.