Retirement Age: Most Americans Plan for 65, Retire at 62

The retirement age gap describes the difference between when Americans expect to stop working and when they actually do, and recent survey data shows that gap is real and costly. Most workers plan to retire at 65, but the median actual retirement age is 62, according to a survey from the Employee Benefit Research Institute.

In Brief

• Workers expect to retire at 65 on average, but the median actual retirement age is 62.
• Nearly half of retirees left the workforce earlier than they had planned.
• Illness or hardship accounted for 41% of early exits; company changes accounted for 35%.
• Retiring three years early can mean tens of thousands less in savings plus lost investment growth.
• Health coverage and Social Security timing both get more complicated when retirement arrives ahead of schedule.

Why So Many People Retire Earlier Than Planned

The reasons behind early retirement are rarely a matter of choice. In the EBRI survey, 41% of retirees pointed to hardship, things like a health diagnosis or physical inability to keep working, as the reason they left their jobs sooner than intended. Another 35% said layoffs, buyouts, or other organizational shakeups pushed them out the door. Almost half of all retirees surveyed said their exit came sooner than they had expected, which suggests that treating 65 as a fixed target rather than a rough estimate can leave people unprepared.

What an Early Exit Costs in Real Dollars

The math behind a shortened career is unforgiving. Take someone earning $80,000 a year who puts 5% of salary into a 401(k) and gets a 5% employer match. Retiring at 62 instead of 65 means losing out on roughly $24,000 in contributions alone, not counting three additional years of investment growth on that money. That gap compounds the longer someone might have otherwise worked, which is why financial planners tend to treat the mid to late 50s as a critical window for building a cushion.

Filling the Health Insurance Gap Before Medicare

Medicare generally doesn't kick in until age 65, so anyone leaving work earlier has to bridge that gap somehow. Options include staying on a spouse's employer plan, paying for COBRA continuation coverage, or shopping for a policy on the Affordable Care Act exchange. None of these are free, and premiums can eat into savings that were meant to last decades, not just fill a temporary gap.

Catch up contributions offer one way to build a buffer against these costs. Workers 50 and older can put extra money into retirement accounts beyond the standard limits. For 2026, the catch up limit is $1,100 for IRAs and $8,000 for 401(k)s, on top of regular contribution caps.

Rethinking Your Job and Your Social Security Timeline

Geoffrey Sanzenbacher, a professor of the practice at Boston College, suggests taking a hard look at your job in your early 50s. If the role feels unsustainable, whether physically demanding or simply misaligned with your skills, it may be worth switching to something more likely to carry you to your actual retirement date rather than waiting for a forced exit.

Social Security timing adds another layer. Someone with a full retirement age of 67 who claims at 62 will see their monthly benefit reduced by about 30%. Whether claiming early makes sense depends on factors like life expectancy and whether a spouse is collecting benefits based on that person's earnings record. There's no universal answer, but the earlier those calculations happen, the more options remain on the table when an unplanned retirement actually arrives.