Retiring at 62 Costs Average American $250,000 as Social Security Drops 30%
Updated
Updated · Fortune · Jun 7
Retiring at 62 Costs Average American $250,000 as Social Security Drops 30%
2 articles · Updated · Fortune · Jun 7
Summary
$250,000 in lifetime income can be lost by retiring at 62 instead of 67, the report says, framing longevity—not markets—as the biggest retirement risk most Americans underestimate.
Claiming Social Security at 62 cuts benefits about 30% versus full retirement age; for a worker due $2,500 monthly, that means roughly $1,750 instead, while waiting until 70 lifts it to about $3,100.
Five extra years of withdrawals also deepen sequence-of-returns risk, leaving portfolios more exposed to market downturns early in retirement when losses are hardest to recover from.
NBER research cited in the piece adds a health dimension: among U.S. men ages 51 to 64, leaving work caused measurable cognitive decline, potentially undermining complex late-life financial decisions.
With 1 in 4 Americans aged 65 expected to live past 90, the article argues retirement planning should target age 95 or even 100 rather than treating 65 as a finish line.
Could your retirement plan be unintentionally accelerating your brain's aging? New research raises alarms.
Are annuities the key to a secure retirement, or a complex trap for your life savings?
If the 4% rule is dead, what new financial blueprint can guarantee you won't outlive your money?
The High Price of Early Retirement: How Claiming Social Security at 62 Can Cost Over $250,000
Overview
Retiring early at age 62 can lead to a significant financial impact, with over $250,000 in lost lifetime income due to reduced Social Security benefits. This loss happens because claiming benefits before full retirement age results in a permanent reduction in monthly payments, while waiting until age 70 allows for higher benefits through delayed retirement credits. For example, an average worker could see their monthly benefit drop from $2,500 to $1,750 by claiming early, or increase to $3,100 by waiting. Over a 30-year retirement, these differences add up, making the timing of Social Security claims a crucial decision.