April 25, 2024

4 Financial Signs You’re Not on Track To Retire at 62

dmbaker / Getty Images/iStockphoto

dmbaker / Getty Images/iStockphoto

The average retirement age has been ticking up over the last few decades. In 1991, the average American reported retiring at 57, while in 2022 the average reported retirement age was 61, per Gallup. Meanwhile, Gallup also found that the target retirement age among those who aren’t retired yet went up from 60 in 1995 to 65 in 2022.

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So, while some people can still retire at age 62, know that retirement ages are trending upward. You might be thinking you can retire at 62, since that’s the age point in which you’ll be eligible for Social Security. However, you might not be on track to retire at 62 if you still face the following types of issues:

1. You Have High-Interest Debt

Carrying debt as you get closer to retirement could weigh down the likelihood of retiring at 62, especially if you have high-interest debt. A mortgage is one thing, as perhaps you’re close to paying that off or will downsize in retirement. But if you have high-interest debt with, say, credit cards, interest fees could eat away at your monthly retirement income. Plus, that could be a sign that you’re not saving enough money.

Around four out of ten Americans 65+ have too much debt, according to the Center for Retirement Research at Boston College. Rather than ending up in that group, consider paying down your debt, particularly high-interest unsecured debt (such as credit cards), before retirement.

2. Your Monthly Retirement Income Projections Are Too Low

Another big sign that you’re not on track to retire at 62 is if you do the calculations to project your monthly retirement income and find that the numbers are lower than you’d like. And if you haven’t done those calculations, do so well in advance of retiring so you know where you stand.

You can find free retirement income calculators online that let you put in information like your retirement savings and the years until retirement to see what your retirement portfolio will yield in terms of monthly income. If that amount, combined with Social Security projections, isn’t enough to cover your bills and desired spending in retirement, you need to change course. Increasing your retirement age could be one solution, or you might decide to make changes like saving and investing a higher percentage of your income.

3. You Don’t Have a Plan for Healthcare Expenses

If you retire at 62, you could have a gap of a few years until you become eligible for Medicare at age 65. You might have gotten used to having your health insurance mostly covered by your employer, but the costs of buying it on your own, especially in your 60s, could get expensive. That’s not to say that not having employer-sponsored health insurance means you can’t retire, but it’s crucial to account for health insurance costs and potential out-of-pocket expenses.

And as a recent U.S. Bank article has pointed out, once you qualify for Medicare, there can still be other costs to prepare for, including Medicare premiums. For 2024, Medicare Part B premiums range from $174.70 to $594, depending on your income.

Plus, U.S. Bank noted, it’s important to plan ahead for long-term care or medical/personal assistance costs. Some retirees choose long-term care insurance, while others choose to self-fund, but either way, you probably don’t want to retire without accounting for these potential costs. Nearly 70% of people end up needing some form of long-term care services, according to the Administration for Community Living, part of the U.S. Department of Health and Human Services.

4. You Don’t Have a Post-Retirement Plan

Lastly, if you don’t have a plan for how you want to spend your life in retirement, then you’re probably not ready to retire at age 62. Not only can not having a plan affect your ability to enjoy retirement from a mental and emotional perspective, but it can also affect you financially. For example, where you live in retirement can affect your retirement income needs. If you decide at the last minute, you might find that you don’t have enough money to support your desired lifestyle.

And as Morgan Stanley research has found, retirees with different types of retirement lifestyles have different likelihoods of affording both essential and discretionary expenses. For example, those who spend a lot of time and money traveling in the early and middle years of retirement are less likely to afford essential and discretionary expenses than retirees who focus on entertaining guests at home.

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Altogether, not having these four areas — debt, retirement income projections, healthcare and retirement lifestyle — planned out and under control indicates you’re not on track to retire at age 62. You might still be able to get there, but you probably need to make some adjustments now, rather than waiting until retirement.

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This article originally appeared on GOBankingRates.com: 4 Financial Signs You’re Not on Track To Retire at 62

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