Are you 62 in 2021? Here’s what you need to know

The age of 62 may not seem like a big milestone, but if it’s the age you’ll reach this year, it could actually be a focal point on your way to retirement – or maybe even the year you choose Close. Here are some things to know if you’re turning 62 in 2021.

1. You can sign up for Social Security – but that doesn’t mean you should

62 is the earliest age to apply for social security benefits, and it is also the most popular age to enroll among eligible seniors. But just because you’re eligible to claim benefits at 62 doesn’t mean it’s a good idea.

You are entitled to your full monthly benefit, based on your personal income history, once you reach full retirement age, or FRA. FRA depends on your year of birth, and if you turn 62 this year, that means you were born in 1959. In this case, you will not reach FRA for 66 and 10 months, so if you claim benefits at 62 years, you will reduce them by almost 30%. It’s a big hit to lock in for the rest of your life.

Even if you can’t wait to retire early, it pays to delay your Social Security file if you can. You may be able to achieve this by working part-time after you quit your main job, or by diving into your IRA or 401 (k) plan instead of relying on Social Security earnings to pay your bills. You are allowed to make withdrawals without penalty from any of these accounts starting at age 59 and a half, so if you’re already 61, you’re good to go.

2. You will not be eligible for Medicare

If you are planning to retire at 62, be aware that if you choose this route, you will need to determine health coverage. This is because Medicare eligibility does not begin until age 65.

Now you may be thinking that you will resort to COBRA in order to maintain your employer’s health coverage. But it may not work as well as you think. On the one hand, COBRA can be prohibitive because you are losing the employer subsidy you may have been used to for your insurance premiums. Second, you can only stay on COBRA for 18 months, so if you’re 62 this year and you retire, you’ll still have a coverage gap until you can enroll in Medicare.

Be sure to thoroughly research your health care options if you plan to retire well before your Medicare coverage can take effect.

3. You may want to work a little longer

Some seniors plan to retire at 62, but if you do, you could end up with many years of retirement ahead of you. And while this is a good thing in theory, it can be difficult from a financial point of view, because the more years you have to pay in retirement, the more likely you are to deplete your nest egg during your retirement. life.

Life expectancy has increased in recent years, and if you’re in good health and have a family history of longevity, you’ll need to prepare for longer retirement. As such, it could be advantageous to stay in the labor market beyond 62 years.

As you prepare to turn 62, be sure to keep the above points on your radar. That way, you’ll be in a better position to make the most of 2021 and avoid decisions that you’ll ultimately regret.