Can I Retire at 55, 60 or 62? The Age Gates and the Money Test
Figures checked October 27, 2026 against primary sources
Whether you can retire at 55, 60 or 62 comes down to two questions. First, which doors are open at that age: your 401(k), your IRAs, Social Security and Medicare each have their own start date. Second, whether your savings can cover the years before those doors open and the rest of your life after. This page walks through the rules at each age and then runs the money test on one example person.
The Short Answer
- At 55 you can take money from the 401(k) of the job you leave without the 10% early withdrawal tax (the rule of 55). IRAs stay locked until 59½. You need your own health insurance for up to 10 years and wait 7 years for the earliest Social Security check.
- At 60 all your IRAs and 401(k)s are open without the 10% tax, because you are past 59½. Medicare is still 5 years away.
- At 62 you can start Social Security, but for anyone born in 1960 or later the check is 30% smaller than at full retirement age, 67. If you keep working, the earnings test can hold back part of it.
- Medicare starts at 65 for all three, so health insurance is the cost that grows the most the earlier you stop.
- The money test: for a single person spending $50,000 a year with $2,200 a month from Social Security at 67, our calculator needs about $912,000 at 55, $746,000 at 60 and $676,000 at 62 to last to 95 in 90% of past markets (hypothetical, details below).
What Unlocks at 55, 60 and 62
| Retire at 55 | Retire at 60 | Retire at 62 | |
|---|---|---|---|
| 401(k) of the job you leave | Open without the 10% tax if you leave in or after the year you turn 55 | Open (past 59½) | Open |
| IRAs and old 401(k)s | 10% tax until 59½ unless another exception fits | Open | Open |
| Social Security | Not yet: 7 years to wait | Not yet: 2 years to wait | Can start, 30% reduced (born 1960 or later) |
| Years until full retirement age (67) | 12 | 7 | 5 |
| Medicare | 10 years away | 5 years away | 3 years away |
| Health insurance meanwhile | Employer retiree plan, COBRA, a spouse's plan or the ACA marketplace | ||
Retiring at 55
Before 59½, withdrawals from an IRA or a workplace plan owe an additional 10% tax on top of income tax, unless an exception applies. The exception that matters most at 55 is in the IRS's list of exceptions: if you separate from service during or after the year you reach 55, payouts from that employer's plan are free of the 10% tax. Public safety employees in governmental plans get the same treatment from 50.
Three limits catch people out:
- It covers only the plan of the employer you leave. Money still sitting in a plan from a job you quit before the year you turned 55 does not qualify.
- It does not cover IRAs. The IRS table marks the separation-from-service exception "no" for IRAs. Rolling the 401(k) into an IRA after you leave locks the money back up until 59½.
- The year counts, not the birthday. Leaving in January of the year you turn 55 works; leaving at 54 the year before does not, even if you wait until 55 to withdraw.
Our rule of 55 guide covers the details, including TSP and which plans allow partial withdrawals. Other ways to fund the years before 59½ include taxable brokerage accounts, cash savings and the IRS's other exceptions, such as a series of substantially equal payments from an IRA. For a 55-year-old, the bridge to Social Security is long: 7 years to the earliest check and 12 to the full one.
Retiring at 60
By 60 you are past 59½, which the IRS lists as an exception to the 10% tax for both workplace plans and IRAs. Every account you have is open; you pay only regular income tax on pre-tax money.
Two gaps remain. Social Security cannot start for two more years and is cut if you take it at 62. Medicare is five years away, so you still need to buy health insurance for that stretch. Your withdrawals also count as income for the ACA's premium tax credit, which links your tax planning to your health insurance cost (see below).
Retiring at 62
Social Security says you can start retirement benefits "as early as age 62," and you must be 62 for the whole month to get a payment. Starting early costs you for life. The SSA reduction table shows that for people born in 1960 or later, full retirement age is 67 and a $1,000 benefit drops to $700 at 62: a 30% cut. The regulation behind it (20 CFR 404.410) reduces the benefit by 5/9 of 1% for each of the first 36 months early and 5/12 of 1% for each month after that: 20% plus 10% for 60 months.
Waiting past 67 raises the check further, up to age 70. Our Social Security calculator compares claiming ages and break-even points; average retirement age shows when people actually stop working and claim.
If you still work after claiming: the earnings test
If you claim before full retirement age and keep earning wages or self-employment income, Social Security holds back part of your benefit:
| Your situation | 2026 limit | 2027 limit | Withheld |
|---|---|---|---|
| Under full retirement age all year | $24,480 | $25,560 | $1 for every $2 above the limit |
| The year you reach full retirement age (months before it) | $65,160 | $67,920 | $1 for every $3 above the limit |
| From the month you reach full retirement age | No limit | ||
Only earnings from work count. SSA does not count pensions, annuities, investment income or interest, so 401(k) and IRA withdrawals do not trigger it. The money withheld is not simply lost: once you reach full retirement age, SSA recalculates your benefit to credit the months it held back.
Married couples
A spouse can get up to 50% of the worker's full-retirement-age benefit. Claimed at 62 with a full retirement age of 67, that spousal amount is 35% smaller, which works out to 32.5% of the worker's benefit. Our spousal benefits guide covers the rules, including why the higher earner's claiming age also sets the survivor benefit.
Health Insurance Before 65
Medicare's first sign-up window opens around your 65th birthday: it runs 7 months, from 3 months before the month you turn 65 to 3 months after, and premium-free Part A starts the month you turn 65. Taking Social Security early does not move that date, and delaying Social Security does not delay Medicare: SSA advises applying for Medicare within 3 months of turning 65 to avoid paying more for Part B and Part D.
Until then you need another source of coverage. HealthCare.gov says that if you retire before 65 and lose job-based coverage, you can buy a marketplace plan, and you can apply from 60 days before to 60 days after your separation date. Whether you get a premium tax credit depends on your income, and HealthCare.gov notes that IRA and 401(k) withdrawals generally count as income.
That matters more now. The rule that let households above 400% of the poverty line get a credit applied only to tax years before 2026. For 2026 and 2027 coverage, income one dollar over the line means no credit at all. Our ACA subsidy cliff guide has the 2027 dollar limits and ways early retirees manage their income to stay under them, and healthcare costs in retirement covers what to budget after 65, including the Part B premium.
The Money Test
The rules tell you when you can touch each account. Whether the money lasts is a separate sum with three parts:
- The bridge. From the day you stop working until Social Security starts, savings pay for everything, including health insurance. Bridge cost = yearly spending times bridge years.
- The gap after Social Security. Once benefits start, savings cover only the difference between spending and your benefit, for the rest of your life.
- The order of returns. A market drop in the first years of retirement does more damage than the same drop later, because you are selling investments at low prices to pay the bills. This is sequence-of-returns risk, and it hits early retirees hardest because their money has to last longer.
Our retirement calculator handles the third part by replaying your plan through every stretch of US market history from 1871 to 2023 (Shiller's data, after inflation). It calls a plan on track when the money lasts to your chosen age in at least 90% of those periods, the same confidence level Fidelity uses for its savings guidelines. For a broader method and the withdrawal-rate rule of thumb, see how much do I need to retire.
Worked Examples: One Person, Three Ages
A hypothetical single person spends $50,000 a year in today's dollars, health insurance included, and would get $2,200 a month ($26,400 a year) from Social Security at 67. Savings sit in 60% stocks and 40% bonds, and the money should last to 95. Taxes are inside the $50,000. These are assumptions, not a forecast.
Simple arithmetic, no investment growth:
- Retire at 55: bridge of 12 years to 67 at $50,000 = $600,000. Then a $23,600 gap ($50,000 minus $26,400) for 28 years = $660,800. Total: $1,260,800.
- Retire at 60: bridge of 7 years = $350,000, plus the same $660,800. Total: $1,010,800.
- Retire at 62 and wait to claim at 67: bridge of 5 years = $250,000, plus $660,800. Total: $910,800.
- Retire and claim at 62: the benefit is 30% smaller, $1,540 a month ($18,480 a year). The gap is $31,520 for 33 years. Total: $1,040,160.
Investments that grow shrink those totals; bad markets early on push them back up. Here is the same plan run through our calculator's engine:
| Plan | No growth | Steady average return | Lasts in 90% of history | With $500,000: lasts in |
|---|---|---|---|---|
| Retire 55, claim 67 | $1,260,800 | $637,000 | $912,000 | 13% of periods |
| Retire 60, claim 67 | $1,010,800 | $540,000 | $746,000 | 34% of periods |
| Retire 62, claim 62 | $1,040,160 | $499,000 | $724,000 | 43% of periods |
| Retire 62, claim 67 | $910,800 | $493,000 | $676,000 | 45% of periods |
What the numbers show:
- Each year earlier costs more than a year of spending. Going from 60 to 55 adds about $166,000 to the 90% target, because the bridge is longer and the money has five more years in which a bad market can strike.
- The gap between the steady path and the 90% column is sequence risk. At 55 it is about $275,000.
- At 62, waiting to claim needed less savings in this example ($676,000 against $724,000), because the larger check covers more of each year to 95. If you expect a shorter life, claiming early looks better; the Social Security calculator shows the break-even age.
- Can you retire at 60 with $500,000? For this person, $500,000 lasted to 95 in about a third of past periods. Spending of about $39,000 a year would pass the 90% test, with Social Security at 67. Without Social Security, the same $500,000 supported only about $21,000 a year.
Test Your Own Numbers
The calculator below starts with the age-55 example. Change your age, the age you plan to stop, your savings, spending and Social Security amount (your estimate is on your my Social Security statement at ssa.gov). Everything is in today's dollars.
To see how a set withdrawal rate holds up instead, try the retirement withdrawal calculator. If you are thinking of tapping a 401(k) before you retire, 401(k) loan vs. withdrawal shows what it costs.
FAQ
Can I retire at 55 and live off my 401(k)?
You can withdraw from the 401(k) of the employer you leave without the 10% additional tax if you leave in or after the year you turn 55. IRAs and 401(k)s from earlier jobs still owe the 10% tax until 59½ unless another exception applies. Whether the balance lasts depends on your spending and how long it must bridge until Social Security.
How much do I need to retire at 60?
Multiply your yearly spending by the years until Social Security starts, then add the yearly gap between spending and your benefit for the rest of your life. In our hypothetical, a single person spending $50,000 with $2,200 a month from Social Security at 67 needed about $746,000 at 60 to last to 95 in 90% of past markets.
How much less Social Security do I get at 62?
If you were born in 1960 or later, your full retirement age is 67 and claiming at 62 cuts your monthly benefit by 30% for life. The cut is smaller for each month you wait.
Can I work part-time after claiming Social Security at 62?
Yes, but if your earnings from work go over $24,480 in 2026 ($25,560 in 2027), SSA withholds $1 of benefits for every $2 above the limit. Investment income and retirement account withdrawals do not count. The limit ends the month you reach full retirement age.
Do I get Medicare if I retire at 62?
No. Medicare generally starts at 65 regardless of when you retire or claim Social Security. Until then you need retiree coverage, COBRA, a spouse's plan or a marketplace plan.
Is 62 or 67 better for claiming?
It depends on your health, your other savings and whether you are married. Claiming at 62 pays more checks; waiting pays bigger ones, and for the higher earner in a couple it also raises the survivor benefit.
This article is for general information and is not tax, legal or financial advice. Withdrawal rules are from IRS.gov; Social Security rules and limits from SSA.gov, 20 CFR 404.410 and the Federal Register (November 3, 2025); Medicare and marketplace rules from Medicare.gov and HealthCare.gov; premium tax credit rule from 26 U.S.C. 36B. All read on 2026-10-27. The worked examples are hypothetical: they assume constant spending in today's dollars, full scheduled Social Security benefits and historical market returns, which may not repeat. Check your plan's rules and your own Social Security statement before you decide.
