It's common for Americans to plan to leave the workforce at 65, but the median actual retirement age is 62. Retiring earlier than planned can shrink your savings, limit your choices, and force faster decisions than expected. Planning for an earlier retirement can help protect your savings, bridge health coverage gaps, and delay Social Security if needed.
Many Americans plan to leave the workforce at age 65, but find themselves retiring earlier than anticipated. In a recent survey by the Employee Benefit Research Institute, the median expected retirement age was 65, while the actual median retirement age was 62. Almost half of those in retirement said they left the workforce sooner than they had anticipated.
As for why they're retiring early, 41% said they did so due to hardship, such as illness, while 35% did so because of changes at their company or organization. Planning on a later retirement can be risky when many workers leave the workforce earlier than expected. Starting in your 40s or 50s, build a backup plan by saving more and mapping out health insurance costs and Social Security timing.
For workers, retiring early can mean accumulating less in retirement savings, having to choose pricier health insurance options, and needing to collect Social Security earlier. While you might not be planning to retire early, it could be worth creating a contingency plan just in case. Retiring three years earlier than expected could mean missing out on thousands of dollars worth of additional savings.
For example, if you earn $80,000 and contribute 5% of your salary to your 401(k) and earn a 5% match, you would lose out on $24,000 worth of retirement savings by retiring at age 62 instead of 65—plus three years of potential investment growth on that money. Additionally, early retirees will need to determine how they'll obtain health insurance, as Medicare is generally available only to those age 65 and older. Early retirees may need to rely on their spouse for health insurance, enroll in COBRA, or find a plan on the Affordable Care Act (ACA) exchange.
To help prepare for some of these costs, you might want to try stashing additional money in your retirement accounts while you're still working. If you're 50 or older, you could be eligible for catch-up contributions to your 401(k) or individual retirement account (IRA). For 2026, the catch-up contribution limits are $1,100 for IRAs and $8,000 for 401(k)s.
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