The age of 62 may not seem like an important milestone, but if that’s the age you’re going to reach this year, it can be a pivotal point on the road to retirement – or perhaps even the year you choose to bring your career to. a Close. Here are some things you should know if you are turning 62 in 2021.
1. You can apply for Social Security – but that doesn’t mean you should
The age of 62 is the first age to apply for Social Security benefits and is also the most popular age to enroll among eligible senior citizens. But just because you’re allowed to claim your benefits at age 62 doesn’t mean it’s a good idea.
You are entitled to your full monthly benefit, based on your personal earnings history, once you reach full retirement age, or FRA. The FRA depends on your year of birth and if you are 62 years old this year, it means you were born in 1959. In that case, you will not reach the FRA until 66 and 10 months, so if you claim benefits at 62, you will will reduce by almost 30%. It is a great success for the rest of your life.
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Even if you are anxious to retire ahead of time, it is worth delaying your Social Security application if possible. You can achieve this goal by working part time after leaving your main job or applying your IRA or 401 (k) plan instead of relying on Social Security income to pay your bills. You are allowed to withdraw without penalty from one of these accounts from the age of 59 and a half, so if you are already 61, you are fine.
2. You will not be entitled to Medicare
If you are thinking of retiring at age 62, you should know that if you go that route, you will need to obtain health coverage. That’s because eligibility for Medicare doesn’t start until you’re 65.
Now you may be thinking about using COBRA to maintain your employer’s health coverage. But it may not work as well as you think. On the one hand, COBRA can be prohibitively expensive because you are missing out on the employer’s allowance that you may be used to paying insurance premiums for. Second, you can only stay on COBRA for 18 months, so if you are turning 62 this year and are retiring, you will still have a coverage gap until you can apply for Medicare.
Be sure to research your health care options carefully if you plan to retire well before your Medicare coverage begins. Buying private insurance is obviously an option, but it can be more expensive than what you are negotiating.
3. You may want to work a little harder
Some seniors intend to retire at 62, but if you do, you could end up with many years of retirement ahead. And while this is a good thing in theory, it can be a challenge from a financial point of view, because the more years of retirement you need to pay, the more likely you are to exhaust your savings in your life.
Life expectancy has increased in recent years, and if you are healthy and have a family history of longevity, you need to prepare for a longer retirement. As such, it may be worthwhile to remain in the workforce after age 62.
As you prepare to turn 62, be sure to keep the above points on your radar. That way, you will be better positioned to make the most of 2021 and avoid decisions you will regret.