I’m 62 and thinking of retiring in 6-12 months.
What do I need to be aware of and take
action on before I make this move.
Also any words of wisdom from those who have already
retired (Do you like it? What would you do differently?)
Great questions ! I retired last year at 54 and here are some things I did:
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Practice living on your retirement income. Since you are 62 then I assume your income will come from Social Security, Pensions, Investment Income, etc. Set your current income aside.
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Figure out where you health insurance is coming from and determine what the real cost will be. You have 3 years till Medicare so you will need to factor this into your budget. The ACA has been a total disaster and the cost of healthcare has exploded. If your insurance is currently subsidized by your employer then you are going to experience sticker shock.
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If you don’t already have a monthly budget, you need to create one. This will help you see what you have to work with on a monthly basis.
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You need to find something to occupy your time. This took me awhile to do because no one in my friend group is retired. My wife and I now travel 4 months out of the year. I picked golf back up again and play tennis multiple times per week when I am home. I also go to the gym now every day that I am in town. In my opinion this is a very important aspect of retirement.
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Before retiring lock down healthcare income streams, and a clear budget plus plan how you will spend your time, not just your money.
Retired last year and love it; biggest lesson is retire to something (purpose, routine, community), not just from work.
That would be the understatement of the year!
I retired at 61 and because I worked for state government and I would be drawing their pension, they had to offer me health insurance until 65. I had a high deductible plan and I paid $35 per pay period (about $70) per month when they subsidized it. That jumped to $800 in retirement.
To make my decision, I took Social Security at 62, so I had to live on IRA wtihdrawals and pension for about 8 months. For the OP…get a good idea of what your monthly income is going to be. For me personally I found that I was able live comfortably with about a 40% reduction from my working “take home” pay. I do not have taxes withheld from any of my sources, partly because I don’t pay a state income tax since my pension and Social Security are not taxable in my state. But if I withhold from Federal, my state requires that they withhold 5% for state, even though I’ll get all of it back. I didn’t see the sense in doing that, and paying estimates is very easy to do.
As for things to do - have something. Take something you love and do it. And have a group of people to do it with. For me it’s bicycling, and from that group came other opportunities for activities. For me, retirement is the best job I ever had and I’be been retired for 7 years.
One pleasant surprise I found by retiring “early”….when you are on Medicare, your premium for part B is based on your income for the previous 2 years. For me, that income was much lower than when I was working, so my part B premium is the minimum. As you get closer to 65 your email will become flooded with Medicare information. And you’ll need to decide on Medigap or an Advantage plan. There are pros and cons to both, but you might want to stay informed about any Medicare changes before you have to make that decision.
I’m assuming you have decided when you will take social security…I took it at 62. I could have got a little more had I waited, but after I retired the stress levels from worked dropped so much that it has been worth every penny I will “lose”, and I still have another decade or so before would ‘break even’ from taking it early. In my case, I needed SS in order to retire early, but if you don’t…it still might not be a bad idea to take it early. If you don’t need it, turn around and invest it in something and let it grow. At the very least, if you , heaven forbid, pass away before the break even period, you’ll have more money to pass on to your heirs.
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You may have seen in your Social Security statements your Primary Insurance Amount (PIA). That assumes you will keep working and contributing to SS at your current rate until your full retirement age. If you retire early, your PIA will be lower than you’re seeing on the statements now.
You won’t be able to pay health insurance premiums with pre-tax dollars in retirement like you can when employed. Like magic, you’ll have “extra income” equivalent to your annual health insurance premiums to pay taxes on when you retire.
If you haven’t already, get some retirement planning app that will allow you to input difference scenarios and assumptions so you can see how your money will grow and how it’s spent (taxes, mortgage, etc.). We use The Complete Retirement Planner.
You might want to look at your balance of traditional vs Roth 401(k)s and IRAs and see if you need to do Roth conversions. A retirement planning app could help with that.
Work on your health so you are able to enjoy your retirement for as long as possible. Think health span, not just life span.
Do some social activities and spend time with family and friends. Take up a new hobby. Have fun!
I retired 12 years ago and benefited from reading books on retirement that included non financial topics. Morningstar.com has a recent article on retirement books.
Think about the possibility of the Dollar taking a major hit.You need to not save too much in Dollars or Dollar promises,like CD’s,bonds,etc,Hold real assets,like great company stock,commodities,real estate,etc.Keep your spending in check and keep debts low.Shop price and use rewards credit cards.
So, you’ve gotten plenty of financial advice. So not going there.
How does retirement affect other members of your household? Spouse, non-adult kids, etc. Why are you choosing to retire early? How are you wanting to spend your time and efforts? Take time to assess yourself.
Make SURE you have things to do when you retire. I am still struggling to find a PURPOSE. I can get occasional writing work, and have tried volunteer route with not much success.
Retired about 15 years ago and love making our own decisions about spending time. Strong recommendation: Join AARP if you haven’t already done so. They offer lots of retirement related ideas and tips. Also: Kiplinger Personal Finance magazines regularly discuss financial issues that are great for retirees- where to live, how to save and invest, and taxes.
Do you have a hobby you enjoy? My core group is bicycling, but some of them also play Pickleball or some other activity. I got lucky because my cycling group is large and active and we meet for rides two miles from my house so it’s easy to get to. My church is happy to have volunteers - maybe you should try there. I guess I should add that I don’t care about a purpose
Thank you for the ideas butler.
At 65 I’ll receive a small pension and figured I’d take social security at full retirement (670 or later. In the meantime I’d be drawing down after-tax savings and investment accounts.
Heath insurance is the big wild card. My wife is 58 and we have a 21 year old son in college who we are subsidizing. We’re on a high deductible group plan right now through my employer (state government). Either way I know I’m going to be paying a boatload for that when I do retire.
I worked with a financial planner last summer and came up with a budget, so I have that information. His analysis indicated that I’m on track for retirement at 65, but if I were to leave my job early it probably wouldn’t make that much difference.
I guess my plan to occupy my time will be to get more involved in volunteering at my church and local community. Also, I’ve got a long list of home projects I’d love to get a handle on.
I’d also like to establish a more regular exercise routine (walking, maybe dust off my mountain bike, joining the gym). Also do more day trips around the area and explore places I haven’t been to or re-explore ones I haven’t been to for a while.
I should check at the church. “Purpose” is just a running joke with my wife as to what I need! 
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I retired from state government (Kansas) in 2019. My state laws say that if an employee is drawing KPERS (pension) then they must offer me the same insurance until I qualified for Medicare, but they only offered it, there were no subsidies, which were pretty substantial. I had a high deductible plan for only me. My part of the premium was about $75 per month. I figured that the devil you know is better than the devil you don’t know, so I kept that insurance and was paying around $800 per month. I went on Medicare in late 2022. After a couple of years I looked into insurance from the ACA marketplace. A navigator told me that if I was happy with what I had, keep it because while there might be cheaper alternatives, they might not provide equal coverage.
Insurance outside a group plan is going to be pretty expensive. And insurance was the one thing that could have altered my retirement plans. I’m a numbers geek so I set up a spreadsheet wtih my income sources and monthly expenses, including the unsubsidized cost of insurance. It showed I could do it so I help my breath and took that leap. For me, I never regretted a minute of it. You might check with your state to see if they will allow your family to stay on the group plan after you are on Medicare.
When I retired, I searched multiple national and local websites that list available opportunities e.g. volunteer.org. I was fortunate to find a volunteer activity that I have continued with for over a decade.
Thank you Sonoran for the response.
From what I can tell (at this point), if I retire our lifestyle won’t take much of a hit. My wife is okay with me continuing working or retiring, she’s left the decision up to me. I guess the main reason I’m thinking of retiring early is because I’ve had a few friends retire recently and my boss who’s also my age is going to hang it up in a month or two. I feel like I have enough interests to keep myself busy, including doing volunteer work and being more available to help others. But not working is uncharted territory for me, so it’ll be a leap of faith if decide to make the move.
Will your current state government health insurance be available to you upon retirement?
The following are three things that need to be in order before your retirement:
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Your Money—Make sure you know your true monthly expenses, create a cash reserve of six to twelve months of expenses, and understand when you will begin receiving Social Security benefits.
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Your Health Insurance—If you live in the United States, you must make careful plans for health insurance until you become eligible for Medicare at 65 years of age.
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How You Are Going To Spend Your Time—Retirement is easier when you have a structured way to fill your time, such as having interests or commitments (even if they are small).
Many people enjoy retirement, but many retirees wish that they had planned for their daily activities in addition to their financial readiness for retirement.