5 Things You Need to Know Before Retiring at 62

The COVID-19 pandemic brought about a surge in early retirements that came to be called the Great Resignation. New research from the Federal Reserve Bank of New York suggests that, as with many aspects of post-pandemic culture, there may be a lingering aftereffect on the U.S. labor market.

Fed researchers found “a persistent change in retirement expectations.” The share of workers saying they were likely to stay in full-time jobs past age 62 dropped from 54.6 percent on average in the six years before the pandemic to 45.8 percent in March 2024.

That’s the lowest percentage since 2014, when the New York Fed launched its Survey of Consumer Expectations, from which the data is drawn. The study found a similar, though less pronounced, decline in Americans expected to work past 67, which will soon become the full retirement age (FRA) for Social Security.

“It is unclear what factors or combination of factors are driving this persistent decline,” the researchers wrote. They posited some possibilities — for example, a preference among older adults for part-time work, uncertainty about life expectancy in the wake of the pandemic or greater optimism that rising wages will help them meet retirement saving goals.

Other recent surveys have shown some workers, notably Generation Xers coming up on retirement age, expect they’ll have to work longer to make ends meet. Alicia Munnell, director of the Center for Retirement Research at Boston College, says she was “very surprised” by the New York Fed findings.

“Usually, people say, ‘I’m going to work forever,’ ” she says. “I don’t know how much weight to put on the full-time or part-time story, and I’m not sure it’s really a confidence thing. I wish I could say something brilliant about this change in sentiment.”

If you’re among those mulling early retirement, remember that forgoing the full-time grind means forgoing a full-time income, too. Here are five things to think about, and plan for, to help you make it work.

1. You can’t sign up for Medicare yet

Tens of millions of retirees rely on Medicare to cover most of their health costs. But most people don’t become eligible for Medicare until they turn 65. If you leave your job, and your group health insurance, before then, you’ll need to find some other way to get coverage, and it will likely cost more than your subsidized plan at work.

“Covered employees are used to paying premiums through their paychecks and getting more attractive rates,” says Rob Williams, managing director of financial planning, retirement income and wealth management at the Schwab Center for Financial Research. “That may not be the case in the private market. But if you retire, you need some other bridge to Medicare for health care coverage.”

What you can do: You have options for building that bridge, but you’ll want to determine the cost and factor it into your early retirement budget, Williams says.

You may be able to maintain your workplace health plan under COBRA, a program that provides temporary coverage, but unlike in your working days, you likely will have to pay the full monthly premium. Getting coverage through the Affordable Care Act (ACA) marketplace is another option. ACA insurers are required to cover preexisting conditions and provide several types of preventive care, including many vaccines, with no out-of-pocket cost.

People with limited incomes can get reduced premiums on ACA plans. People with very low incomes may qualify for Medicaid; in most states, the threshold is 138 percent of the federal poverty level, or $15,060 for an individual and $20,440 for a couple in 2024.