Gen X and Planning To Retire at 62? 5 Things You Must Do First
Written by
Dawn Allcot
Edited by
Maria Concepcion
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With the oldest members of Gen X approaching 60, most people who were raised in the ’70s and ’80s are now thinking about retirement. However, between student loan debt, rising credit card debt, caring for aging parents, and figuring out how to help their children pay for college, retiring comfortably may seem like a pipe dream.
Whether you’re starting from zero in retirement savings or have built up a small nest egg, if you’re looking to retire at 62, there’s a lot to consider.
Make Sure You Can Afford Healthcare
The average 65-year-old couple retiring in 2024 can expect to spend $315,000 on healthcare costs throughout their retirement, GOBankingRates previously reported.
Retiring from a job typically means losing your healthcare benefits. Medicare doesn’t kick in until you turn 65. So if you plan to retire at age 62, you’ll need to account for the costs of a private health insurance plan.
If you don’t qualify for a plan subsidized by the ACA, you could expect to pay more than $1,000 per month for health insurance as a 60-year-old-plus American, according to data published by Forbes Advisor.
Understand You’re Sacrificing Some of Your Social Security Income
Your Social Security benefit could be reduced by as much as 30% if you don’t wait until Full Retirement Age, which is age 67 for Gen X. If you hold out to retire until age 70, you’ll get a boost of 8% for each year you wait.
Consider All Costs
The past few years have seen inflation higher than we’ve seen in 40 years. Food prices rose by as much as 25% since 2020, AARP reported. Although inflation is beginning to stabilize, if you’re planning for an early retirement, consider how you would fare if prices started going up again.
“The surveys that are showing people’s expectations of an early retirement going up might be more a result of society’s lack of experience with inflation,” Chris Manske, president of Manske Wealth Management in Houston, told AARP. “Just because you can transition to a fixed income at today’s prices doesn’t mean you’ll be comfortable after 10 or 20 years of prices going up.”
Ramp Up (Or Start) Your Savings
If you’re amongst the younger Gen Xers, in your mid-40s, you still have time to build a retirement nest egg to leave the workforce by 62. If you take advantage of compound interest in an investment account right now and invest $650 per month, according to Community First Credit Union of Florida, you could end up with close to $1 million by age 67. If you’re older than 40 and plan to retire at 62, you’ll need to free up funds to invest even more.
If you already have retirement investments and you’re at least 50 years old, take advantage of catch-up contributions by putting an additional $7,500 into your 401(k) each year until retirement.
Think About How You’ll Spend Your Time When You Retire
Planning for retirement is more than a matter of dollars and cents. If you’re planning to retire early, how will you spend your time? If you have enough savings socked away, you might be planning to travel. But if you’re going to be retiring on a fixed income or tight budget, do you have affordable ways to pass the time and stay social and stimulated?
For some Gen Xers, considering a side gig or starting a side business or passion project in retirement could be a way to help fund retirement while staying busy and giving their life greater purpose.
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