How to retire at 62 with no money?
If you retire with no money, you'll have to consider ways to create income to pay your living expenses. That might include applying for Social Security retirement benefits, getting a reverse mortgage if you own a home, or starting a side hustle or part-time job to generate a steady paycheck.
Age | Average retirement savings (2022) | Median retirement savings (2022) |
---|---|---|
45 to 55 | $313,220 | $115,000 |
55 to 64 | $537,560 | $185,000 |
65 to 74 | $609,230 | $200,000 |
75 or older | $462,410 | $130,000 |
If you're an average earner, Social Security will only replace about 40% of your former income. So if you retire without any savings, you might end up effectively taking a 60% pay cut. At the start of 2023, the average Social Security benefit was $1,827 a month. That's an annual income of a little less than $22,000.
- Figure out what you'll do with your time.
- Set up a sustainable income.
- Decide when to claim Social Security.
- Line up post-retirement health care.
- Prepare for the unexpected.
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
Average Monthly Retirement Income
According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.
The limit only applies if you claim Social Security before reaching your full retirement age. The earnings limit increases (to $56,520 in 2023) for the calendar year in which you'll reach full retirement age. Starting in the month you hit your full retirement age, there is no longer an earnings limit.
Many retirees with little to no savings rely solely on Social Security as their main source of income. You can claim Social Security benefits as early as age 62, but your benefit amount will depend on when you start filing for the benefit. You get less than your full benefit if you file before your full retirement age.
Nearly 2 in 5 Retirees Have No Retirement Savings
The survey found that about 37% of retirees say they have no retirement savings, up from 30% in 2022, and only about 12% have at least the recommended $555,000 in savings.
Some experts say to have at least eight to 10 times your annual salary available to you once you enter retirement. Others say you need at least 65% to 80% of your pre-retirement income available to you each year. There are also general savings recommendations by age, and, finally, there's the 4% rule, too.
What is the lowest Social Security payment at age 62?
For 2024, the special minimum benefit starts at $50.90 for someone with 11 years of coverage and goes to $1,066.50 for workers with 30 years of coverage. A financial advisor can help you plan your retirement taking into account your Social Security benefits.
When it might make sense to take Social Security at 62. You need the money now. You have health issues that may shorten your life expectancy, or you don't expect to live past your break-even point. You're receiving early retirement from an employer and the benefits end at age 62.
The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2024, your maximum benefit would be $3,822. However, if you retire at age 62 in 2024, your maximum benefit would be $2,710. If you retire at age 70 in 2024, your maximum benefit would be $4,873.
You can get Social Security retirement or survivors benefits and work at the same time. But, if you're younger than full retirement age, and earn more than certain amounts, your benefits will be reduced. The amount that your benefits are reduced, however, isn't lost.
Reason #1: Retire Early if You Want to Stay Healthier Longer
Retiring at 62 from a backbreaking job or one with a disproportionately high level of stress can help you retain, or regain, your good health and keep it longer. Just be sure to have a plan for being mentally, socially and physically active.
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
According to the Bureau of Labor Statistics (BLS), the average income of someone 65 and older in 2021 was $55,335, and the average expenses were $52,141, or $4,345 per month.
Top the amount with 401(k) savings, living on $3,000 a month after taxes is possible for a retiree. For those who only have social security benefits to rely on, there are many places where they can retire on their checks both in the USA and around the world.
Follow the 3% Rule for an Average Retirement
If you are fairly confident you won't run out of money, begin by withdrawing 3% of your portfolio annually. Adjust based on inflation but keep an eye on the market, as well.
Regardless of the reasons you might have, the good news is that once you reach full retirement age, you'll no longer suffer any penalties for working. You'll be entitled to your full monthly Social Security benefit regardless of how many hours you work.
How much money will I lose if I retire at 62 instead of 65?
A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent. Starting to receive benefits after normal retirement age may result in larger benefits.
It is never too late to start saving money you will use in retirement. However, the older you get, the more constraints, like wanting to retire, or required minimum distributions (RMDs), will limit your options. The good news is, many people have much more time than they think.
But even if you never worked and therefore don't have an earnings record, you're not necessarily out of luck. If you're married (or were married) to someone who's entitled to Social Security, you can collect spousal benefits equal to 50% of your husband or wife's benefits at full retirement age.
Key Points. If you hope to retire without Social Security, you'll probably need to save $1 million or more on your own. Making monthly retirement contributions is key to achieving that goal.
For most retirees, Social Security and (to a lesser degree) pensions are the two primary sources of regular income in retirement. You usually can collect these payments early—at age 62 for Social Security and sometimes as early as age 55 with a pension.
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