I’m 60 With $960k in an IRA, $300k in a 401(k) and Would Expect a $2,400 Social Security Check. Can I Retire at 62?

Many 60-year-olds with $1,260,000 in tax-deferred retirement accounts and a work history that will entitle them to $2,400 monthly from Social Security could probably retire in two years. However, much depends on circumstances. Individual lifestyle preferences, including local cost of living or retirement hobbies and travel, along with expenses like long-term health care and inflation could add up. Other factors to consider include your personal debt load, particularly whether you have an existing mortgage, and the outlook for your overall longevity. Even a seemingly well-funded retirement could fall short if things turn out the wrong way, so it’s important to take a look at the whole picture before you can determine if you can retire at 62.

A financial advisor can work with you to develop a strategy that aims to project your income and expenses in retirement.

Retirement Income

Deciding whether or not you can retire involves balancing your expected income in retirement against your expected expenses. If it appears you will likely have enough funds to pay your costs of living, with a cushion for contingencies, retirement may be feasible. Let’s start with the income aspect.

The $1,260,000 combined balances of your IRA and 401(k) accounts could grow to $1,442,574 over the next two years if you assume a 7% average annual return. A more conservative investment strategy emphasizing capital preservation over growth might be more appropriate for someone near retirement. This could average 5% annual growth, potentially giving you $1,389,150 in two years.

The 4% guideline suggests you can safely withdraw 4% of your retirement account balance each year, increasing the amount annually by the rate of inflation. Using this rule of thumb, someone with $1,389,150 would withdraw $55,566 the first year of retirement. Assuming 2% inflation, in the second year they would withdraw 102% of that amount, or $56,678, and so on. Historical evidence across a wide range of past market conditions indicates a high likelihood that this strategy would have allowed a retirement nest egg to last at least 30 years.

You can claim Social Security retirement benefits as early as age 62. Your $2,400 monthly benefit equals $28,800 annually. You could increase this by delaying claiming Social Security benefits. Because claiming at 62 represents a permanent reduction of about 30% from your full retirement age benefit, the implied full retirement age (67) benefit would be approximately $3,429 per month, or about $41,148 per year.

If you delay claiming until age 70, delayed retirement credits of 8% per year apply only after full retirement age. Delaying three years from 67 to 70 would increase the benefit by about 24%, resulting in an estimated monthly benefit of $4,252, or approximately $51,024 per year.

Assuming you claim Social Security at 62 and receive $28,800 annually, with $55,566 in investment income, total first-year income comes to $83,766. This will increase annually more or less in step with inflation. Now let’s look at expenses.

Remember, this example uses many simplified assumptions. A financial advisor can help you do the math for your retirement strategy.

Retirement Spending

One way to estimate retirement expenses is to use a guideline of 75% of your pre-retirement income. Data on average earnings by age indicates that the average person will earn about $65,936 the year before your planned retirement age. According to this guideline, $49,452 is likely to be adequate to support a retirement lifestyle. Actual figures for average retiree spending vary. The Bureau of Labor Statistics reported that 2023 expenditures for households headed by someone 65 or older were $60,087 on average. ¹

A more customized way to project your retirement expenses is to take your current expenses and modify them to reflect changes after you stop working. For instance, you won’t have expenses for retirement savings, work clothes, or commuting costs. Adding up your current expenses may help you spot ways to reduce costs if necessary. For most people housing is their biggest expense in retirement, so moving to a lower-cost location can be an effective way to bring your spending in line with your income.

Taxes can be a significant concern in retirement. Retirement account withdrawals are taxable, and after age 75 (assuming you are 60 now) you’ll have to start taking required minimum distributions (RMDs) from your accounts. In your case, you are likely to be already withdrawing more than the RMD amounts, so this will probably not be an issue. Generally speaking, most people pay fewer taxes in retirement. However, at your income level up to 85% of your Social Security benefits will also be taxable.

If you have existing debt, such as a mortgage payment or student loans, loan payments may need to be considered in your budget. Healthcare costs tend to go up in retirement, and this can be especially consequential if you have health conditions requiring expensive treatment. Overall, however, your expected retirement income of $83,766 is likely to be comfortably more than your living expenses, assuming they fall near the average of $60,087.

How to Plan for Longevity and Retirement Risk

Longevity risk is the possibility that an individual’s assets will not last as long as their life. Effective planning requires projecting income and expenses over a horizon that could extend 30 years or more, even if average life expectancy suggests less. Assuming a long retirement period creates a margin of safety and forces the use of sustainable withdrawal strategies.

One approach is to pair systematic withdrawals from investment accounts with guaranteed income sources such as Social Security or annuities. This reduces reliance on market performance in later years. Delaying Social Security can further increase lifetime benefits and act as a hedge against outliving assets.

Healthcare and long-term care represent additional risks that grow with age. Planning must account for the likelihood of rising medical costs and potential late-life care needs. Funding mechanisms may include dedicated health savings accounts (HSAs), insurance coverage, or the allocation of a portion of retirement assets specifically for these expenses.

Portfolio construction also plays a central role. Shifting entirely to conservative holdings can expose retirees to inflation risk, while remaining too heavily in equities creates exposure to market downturns. A balanced asset allocation that provides growth to preserve purchasing power while maintaining liquidity and stable income is essential to managing longevity risk over multiple decades.

Should You Retire at 62 or Wait? A Side-by-Side Comparison

While your numbers suggest retiring at 62 may be feasible, the decision ultimately comes down to trade-offs between timing, income security and long-term sustainability.

If you retire at 62 and claim Social Security immediately, you could generate approximately $83,766 in first-year income, combining withdrawals from your retirement accounts with your reduced benefit. This approach gives you more years in retirement but locks in a permanently lower Social Security payment and increases reliance on your investment portfolio earlier.

Waiting until full retirement age of 67 changes the equation. Your estimated monthly Social Security benefit would rise from $2,400 to about $3,429, increasing your annual guaranteed income by more than $12,000. Delaying withdrawals from your retirement accounts for five additional years also gives your portfolio more time to grow, which can improve long-term sustainability and reduce sequence-of-returns risk.

If you delay benefits until age 70, your monthly Social Security income could increase to approximately $4,252, or about $51,024 annually. At that point, a larger portion of your retirement income would come from guaranteed sources, reducing pressure on your investment accounts later in life. This strategy can be especially valuable if you expect to live into your 80s or 90s.

However, waiting is not always the right choice. Delaying retirement may not align with your health, job satisfaction or personal goals. Additionally, postponing Social Security means drawing more heavily from your savings in the interim if you stop working before claiming benefits.

In general, retiring at 62 offers more flexibility and time, while waiting provides greater financial security and higher guaranteed income. The right decision depends on your expected longevity, lifestyle priorities and comfort with market risk. A financial advisor can help you model these scenarios to determine which approach best supports your retirement goals.

Bottom Line

Your financial resources suggest you may be able to retire at age 62, depending on your lifestyle. However, you can increase your retirement income significantly by waiting to claim Social Security benefits. That could help you cover your expenses if you expect to spend more in retirement than the typical retiree. You could also lower expenses by relocating or downsizing, if necessary. Be sure to consider factors that may be unique to your situation, such as significant debt payments or prospects for high healthcare costs.

Investment Planning Tips

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• Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be a liquid account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.
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