How Much Do You Really Need to Retire Early?
Early retirement sounds like a dream—but how much does it really take to make it sustainable? The answer depends on more than just your savings target. Retiring at 55 isn’t just retiring 10 years early—it’s stretching your portfolio 10 years further.
The Factors That Make Early Retirement More Expensive
🔻 1. More Years of Spending
If you retire at 55, you may need your portfolio to last 40+ years. That’s a long runway—especially with inflation eating into purchasing power over time.
🔻 2. Fewer Years of Earning
You won’t have the benefit of 10 more years of income, 401(k) contributions, or employer matches.
🔻 3. Health Insurance Gaps
You’ll need to self-fund health care for a decade before Medicare begins—potentially $10k–$25k per year for a couple, depending on subsidies.
🔻 4. Delayed Social Security
Most early retirees delay Social Security until age 67 or 70 to maximize benefits, which means relying fully on your investment portfolio for the first 10–15 years.
The Right Question: How Much Do You Need?
There’s no one-size-fits-all number, but here’s what we evaluate in every early retirement plan:
- Spending Plan by Phase: Are your early retirement years travel-heavy? Will your expenses drop later?
- Withdrawal Rate Stress Testing: 3–4% is a starting point—but volatility and flexibility matter more.
- Risk Tolerance Alignment: Your portfolio must match your emotional ability to stick with the plan through turbulence.
- Spending Flexibility: Are your expenses mostly fixed, or can you dial back spending during market downturns?
Case Study (Simplified Example)
Retire at 55 | Retire at 65 | |
|---|---|---|
Years in retirement | 40 | 30 |
Target annual spending (inflated) | $120,000 | $120,000 |
Estimated portfolio needed | ~$4.5M | ~$3.2M |
Break-even point for delaying Social Security | ~12 years | ~7 years |
How We Help Early Retirees Plan Confidently
We use several advanced tools to bring clarity to the early retirement decision:
- Monte Carlo Simulations – We test your plan across 1,000+ potential market scenarios to measure sustainability.
- IncomeLab – We project real-world spending over time, adjusting for lifestyle phases and inflation.
- Tax-Smart Withdrawal Strategies – We help sequence withdrawals from taxable, tax-deferred, and Roth accounts to improve outcomes and lower taxes.
Bottom Line
Early retirement is possible. But it requires more than just a big number—it requires a smart plan.
If you want to retire at 55 (or earlier), make sure your plan can go the distance—through bull markets, bear markets, high inflation, and everything in between.
Ready to find out how much you really need to retire early—and stay retired?
👉 Schedule your free 30-minute planning session
