Retire at 62 with $1 Million: A Full Income Plan (2026)

Can I retire at 62 with $1 million?

Landing at 62 with a seven-figure balance puts a household ahead of the vast majority of American retirees, though it does not guarantee a comfortable retirement on its own. Everything hinges on three choices: the age at which Social Security gets claimed, how much market risk the portfolio keeps carrying once the paychecks stop, and how much guaranteed income gets locked in before a bad market can do damage that cannot be undone.

Households that can keep annual spending under about $70,000 to $80,000, measured in current dollars, tend to find this plan holds up well. Push past that ceiling and the portfolio has to keep compounding aggressively straight through retirement, which reintroduces the exact risk a guaranteed income floor is supposed to remove.

Put plainly: this works for moderate spenders, works with some conditions attached for bigger spenders, and rarely works at all without a home that is paid off or nearly there. The plan's real job is setting a sensible withdrawal rate, picking the right Social Security claim age, and making sure essential bills are covered by something other than a portfolio balance that can drop 30% in a bad year.

How much income does $1 million generate at 62?

Four reference points, each assuming income needs to last through age 95 or so.

A 4% withdrawal rate on the full balance produces about $40,000 in the first year, rising with inflation after that. It is the number most financial plans start from, but a rough first decade of markets can permanently dent what the portfolio can safely support later.

Using a hypothetical payout rate, converting the whole $1 million into a single-life immediate annuity could pay somewhere near $66,000 a year for as long as you live, though every dollar of principal is gone the moment the contract is funded. Structure the same purchase as joint life instead, covering a spouse as well, and the annual figure drops to roughly $58,000, paid until the second spouse passes.

A blended structure looks different again. Put $300,000 into an annuity at that same hypothetical rate and you would see close to $20,000 a year guaranteed, while the remaining $700,000, drawn at 4%, adds another $28,000. That is close to $48,000 combined in year one, with most of the money still positioned to grow.

Whatever combination you pick, Social Security claimed at full retirement age (67 for most people reading this) typically adds $30,000 for a single earner or up to $48,000 for a two-earner household on top. None of this is really a choice between an annuity and a portfolio. It is finding the right blend of both, with Social Security doing the heavy lifting underneath.

Should I take Social Security at 62?

For most households in this position, no. Claiming at 62 permanently reduces the monthly check by roughly 30% compared with waiting for full retirement age, and by about 43% compared with waiting until 70. Take a benefit that would pay $30,000 a year at full retirement age: that becomes about $21,000 starting at 62, versus roughly $37,200 starting at 70, and that gap repeats every single year for the rest of your life, adjusted upward for inflation.

Because $1 million is generally enough to fund a bridge of 5 to 8 years to a bigger check at 70, delaying tends to be the better math for whichever spouse earns the higher benefit. The lower earner has more flexibility on timing. Our guide on when to claim Social Security walks through how the bridge strategy plays out.

There are exceptions where filing at 62 makes sense: a materially shortened life expectancy, a single retiree with no survivor benefit to worry about, or a household where early access to ACA subsidies between 62 and 65 outweighs the smaller lifetime benefit. Outside of those situations, waiting almost always wins.

Building an income floor at 62

An income floor is the portion of essential monthly expenses, housing, food, insurance, that you want covered by guaranteed sources such as Social Security, a pension or annuity payments, no matter what markets do. For a typical household with $1 million saved, essentials often run $42,000 to $54,000 a year. If Social Security at full retirement age covers $30,000 to $48,000 of that, the remaining gap, usually somewhere between $6,000 and $18,000, is exactly the amount an annuity needs to fill.

Multiply that annual gap by a rough factor of 20 to 25, a workable range for pricing an immediate annuity purchased between 62 and 67, and you land on a premium somewhere between $150,000 and $400,000. Whatever is left after funding that gap stays invested, doing the work of growth, inflation protection and discretionary spending.

Withdrawal rate versus guaranteed income at 62

Retiring eight years before the more typical age of 70 adds eight extra years the portfolio has to support. That changes the math behind a safe withdrawal rate. The classic 4% figure was designed around a 30-year horizon; stretch that to 33-plus years, which is what a 62-year-old should plan for, and most current research points closer to 3.5% as the truly conservative starting point.

A more practical approach for many households at this age is to cover essential spending with guaranteed income first, then run a more assertive 4.5% to 5% withdrawal rate on whatever is left, since the basics no longer depend on that money. Seen this way, the annuity functions as a backstop underneath the portfolio, not a replacement for it.

A full plan: $1 million at 62

Karen and Bill are both 62, own their home outright, and hold $1,000,000 across two IRAs plus a modest Roth. Their spending target is $72,000 a year, and their combined Social Security benefit at 67 comes to $44,000.

• A $250,000 5-year MYGA bridge. Using a hypothetical rate, the combination of returned principal and accumulated interest covers roughly $50,000 a year of essential spending from 62 through 67, while Social Security stays deferred.
• A $200,000 joint-life immediate annuity, starting at 67. Using a hypothetical payout rate, this adds close to $13,000 a year for as long as either spouse lives, closing the space between the $44,000 Social Security check and their essential costs.
• The remaining $550,000 portfolio stays invested. At 67, the couple begins withdrawing 4.5%, about $25,000 in the first year, to cover travel and other discretionary spending.
• Roth conversions of $25,000 a year, done from 62 to 67, while taxable income is naturally low, to shrink the size of future required distributions.

Put together, the household reaches $72,000 or more of after-tax income once Social Security and the annuity income are both running, with the portfolio funding everything beyond the basics. Because the essentials never depend on portfolio performance, a 30% market decline would not force any change to how Karen and Bill actually live.

What tends to go wrong at 62

The most common misstep is filing for Social Security at 62 simply to "get it locked in," then hitting a rough market in the first few years and either selling investments at a loss or cutting spending to compensate. Claiming early permanently caps an inflation-protected income source and asks the portfolio to carry more weight than it should.

The second misstep is overbuying annuities. Committing more than 40% to 50% of investable assets to immediate annuities at 62 can leave a household short on liquidity with no real growth engine left. A range closer to 20% to 35% tends to be the more common, better-balanced allocation.

The third is not planning for a surviving spouse. When the first spouse passes, the smaller of the two Social Security checks disappears entirely. A joint-life annuity, a survivor-focused claiming strategy, or both, is not optional for a married couple building this plan.

Other guides worth reading

• When to claim Social Security: the tradeoffs behind claiming early, at full retirement age, or at 70.
• Annuity bridge strategy: using a MYGA to fund a delay in claiming.
• Retirement income gap analysis: sizing the exact shortfall between guaranteed income and essential spending.