23% of Americans Expect to Retire Between 60 and 64. She Stops Working at 60, Then Faces Two Years Without Social Security Checks

The severance offer lands on a Tuesday. Her employer will keep paying her for a few months if she agrees to leave on her 60th birthday. She’d planned to work until 65, but the numbers are tempting. And she’s hardly alone in considering an early exit. A study released by MDRT, an association of financial professionals, found that 23% of Americans expect to retire between 60 and 64.

There’s one gap the offer doesn’t close. Social Security retirement checks can’t start until 62. Once the severance runs out, she still has months of bills to cover before her first check is even an option.

Why Her Paycheck and Her Benefits Don’t Line Up

The Social Security Administration (SSA) lets retirement benefits begin as early as age 62. For anyone born in 1960 or later, full retirement age (FRA), the point where you collect 100% of your earned benefit, is 67.

It helps to pull apart three events that people tend to lump together. She controls the first one, leaving the job. The calendar controls the second, becoming eligible. The third, deciding when to claim, goes back to her, and she can make that call in any month from 62 forward.

The exit package covered only the first event. The claiming decision is still wide open. The core challenge is cash flow, and the retirement-benefit decision comes at the end of it.

Two Years of Bills, Then a Lifelong Choice

The SSA’s early-claiming table shows that when full retirement age is 67, a benefit started at 62 is cut by about 30%. The cut is permanent.

Say her benefit at FRA is $2,000 a month, which is close to the $2,095 average check for retired workers. If she starts at 62, she generally gets $1,400 a month instead, before any cost-of-living adjustments (COLAs).

Social Security starts applying inflation adjustments to her future benefit at 62, whether she claims then or waits. But those raises won’t erase the 30% cut she’d take by filing early.

Leaving work at 60 affects her benefit only through her earnings record. Her benefit is based on her highest-earning years. Giving up a couple of working years matters only if they would have replaced weaker years on her record. The real cost of leaving early is two years of household spending with no Social Security coming in. She still has to cover two years of bills without Social Security. Filing as soon as she turns 62 may ease the pressure afterward, but it leaves her with a smaller check for life.

Ways to Pay for the Bridge Years

Several sources can cover the gap, and most people end up combining a few of them:

1. Cash savings and severance. This is the simplest bridge. Putting severance in a high-yield savings account and setting up a monthly transfer to checking gives her a regular income in place of a paycheck.
2. Pension access. If she has a pension, she needs to know the earliest age she can start it and how much smaller the payments are if she starts early. The choice between a lump sum and lifetime payments deserves the same care as her Social Security decision.
3. Planned IRA or 401(k) withdrawals. She is already past the age when the early-withdrawal penalty generally applies. With her salary gone, withdrawals may be taxed at a lower rate. But they can also raise the cost of marketplace health insurance, so she needs to weigh both before tapping those accounts.
4. Lower-stress work. A part-time job that covers even half her expenses stretches her savings a long way. If she claims before full retirement age and keeps working, Social Security temporarily holds back some benefits once her earnings pass an annual limit.
5. Health insurance until Medicare. She has five years until Medicare generally begins at 65, and coverage could be one of her biggest expenses. COBRA may cover part of that stretch, but she’ll also want to price marketplace coverage or a spouse’s plan before treating the severance as spending money.

Disability and survivor benefits follow different rules, and some people qualify before 62. If she’s dealing with a serious medical condition or has lost a spouse, she should check those options too.

Plan the Bridge First, Then Pick a Claiming Age

Start with the next two years. Write down what the household spends each month, including health insurance, and match each dollar to a source: severance, savings, pension, account withdrawals, or work. Once that path is mapped out, filing at 62 becomes a free choice and stops feeling like an emergency.

After that, compare the claiming ages on their own terms. Choosing $1,400 or $2,000 is a decision about longevity, marriage, and how much guaranteed income she wants in her 80s. The mistake that’s toughest to undo is claiming early just because the paycheck ends. Her health, her savings, and a spouse’s record can all change the math, so run her own numbers before she picks a date.

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