How much money do I need to retire at the age of 62?
For many people, 62 years is the target age for when to start retirement. That is because most people qualify to start withdrawing Social Security benefits at this age. However, Social Security benefits alone are usually not enough for most people to live off of for their dream retirements.
If you want to have a larger retirement nest egg you can live off of comfortably for a long time, you will need to have been saving and investing in retirement accounts for years before your retirement. If you have been doing this, then we congratulate you on your choice, but you still might be wondering if you have saved enough to retire at the age of 62. Take a look below at some factors you can consider.
Follow the 4% rule
A rule of thumb that many financial professionals recommend following is the 4% rule. The principle of this rule is that you should be able to withdraw a maximum of 4% of your retirement savings annually and have enough in your account leftover to live off of for the rest of your life.
For example, if you have saved $1 million dollars by the age of 62 and plan on enjoying a long retirement, you can divide the million by 4% to see how much you can expect to live off of annually, which will be $40,000 dollars per year, or roughly $3,333 dollars per month.
Additionally, you need to consider how much of your withdrawals will be taxed or not depending on the type of retirement accounts you have invested in. If you feel like you can live comfortably off of the remaining income after taxes in your retirement, then you might be ready to retire.
Factor in your Social Security benefits
You qualify to receive Social Security benefits at age 62 but not the maximum amount of your benefits. At 62, you will receive a reduced benefit, which varies depending on the year you were born. The amount you receive might be beneficial for you at this time, or you might want to consider delaying your benefits until you reach the maximum at 70.
For example, if you were born after 1960 and want to retire at 62, you will receive $700 dollars in benefits instead of the $1,000 you could receive if you waited until 70 years old. If you cannot wait, you might want to withdraw as soon as you can. If you have enough to live off of to delay your withdrawals and benefit more later, then you should do that.
Discuss your options with a financial professional to help discover the right options for you.
Plan for the long run
Besides what you expect to earn in income from your savings and Social Security, you also need to consider what you expect to pay for. Do you still have debt, such as credit card debt or a mortgage? Do you have a plan in place if your health begins to fail and you need long-term coverage?
Take a look at all of your expenses and weigh them against your income. If you think you can comfortably manage your expenses based on the 4% rule, then you might be ready to retire at 62.
Talk to a ProVise CFP® professional about your retirement planning
Going into your retirement without a plan is like watching a football team play without a coach. The players might be talented enough to make some headway, but without the guidance and planning of the coach, they cannot expect to win. When it comes to your retirement, you might be able to make some decisions on your own, but to really maximize your potential, you need the guidance of a financial professional who can guide you through the financial landscape.
At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can act as your guide. We can get to know your current financial circumstances, long-term goals, risk tolerance and personal values to help develop and maintain a retirement strategy that works for you.
We can create a written plan for you at a fiduciary standard of care. All of our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about your planning for your retirement? Contact ProVise today to schedule a complimentary consultation.