Why Most Americans Intend to Retire at 65—But Actually Leave Work Three Years Earlier

Americans often intend to retire at age 65, but the typical retirement age is actually 62. Retiring earlier than planned can have negative consequences, including a reduction in savings, limited options, and the need to make faster decisions. To address these concerns, experts recommend creating a contingency plan, particularly starting in one's 40s or 50s.

This may involve saving more money, planning for health insurance costs, and considering Social Security timing. Retiring three years earlier than intended could result in significant financial losses, such as $24,000 in lost retirement savings for someone earning $80,000 who contributes to a 401(k) and receives a 5% match. Early retirees must also navigate the challenges of obtaining health insurance, as Medicare is typically available only to those aged 65 and older.

Options for early retirees may include relying on a spouse for coverage, enrolling in COBRA, or purchasing a plan through the Affordable Care Act (ACA) marketplace. The article suggests stashing additional money in retirement accounts for early retirees, particularly those aged 50 or older, who may be eligible for catch-up contributions.

Catch-up limits for 2026 are $1,100 for IRAs and $8,000 for 401(k)s. Additionally, it is crucial to evaluate job prospects in one's early 50s and consider switching to a role that better suits skills and retirement timeline. Lastly, the impact of early Social Security collection on monthly benefits should be carefully considered, as starting at age 62 instead of full retirement age can reduce benefits by 30%.