Retiring at 60 Leaves a Two-Year Gap Before Social Security Benefits Begin
A worker considering a severance package at age 60 would need to cover living costs until Social Security eligibility begins at 62. Claiming at 62 rather than full retirement age 67 permanently reduces monthly benefits by about 30%, turning a $2,000 check into $1,400. Severance, pensions, IRA withdrawals, part-time work, and health coverage can help bridge the gap.
A survey by MDRT found that 23% of Americans anticipate retiring between ages 60 and 64. Social Security retirement payments cannot begin before 62, and for people born in 1960 or later, full retirement age is 67.
Starting at 62 typically reduces a monthly benefit by roughly 30% permanently; a $2,000 full-age amount would become about $1,400. Cost-of-living adjustments begin at 62 whether or not someone claims, but they do not remove that reduction. Leaving work at 60 mainly affects benefits through the earnings record.
This story could resonate with older workers weighing early exits, especially those who lack guaranteed pensions or retiree health coverage. A two-year cash-flow gap may push some households to draw down savings faster, work part-time, or claim Social Security earlier than planned. That choice could permanently lower monthly income, affecting retirement security for individuals and potentially increasing reliance on family support or public assistance later in life. Employers offering severance may also face questions about how clearly they explain benefit timing.