Early Retirement: Is It Really Viable?

Early retirement seems appealing, doesn’t it? If you achieve your financial targets ahead of schedule, taking a break from work to enjoy life with loved ones sounds great.

Interestingly, nearly 20% of adults in the U.S. express a desire to retire before turning 55, as per insights from data analysis firm YouGov. In fact, a study by Schroders reveals that many Americans believe they need around $1.28 million saved up to retire comfortably.

If you’re a middle-aged millionaire with monthly expenses of about $10,000 and your savings are ready, the urge to retire early might be strong. But then again, the numbers tell a different story.

Choosing to retire at 55 instead of, say, 62 or 65 can drastically change your financial needs. This is primarily because you won’t qualify for Social Security or Medicare benefits just yet.

Let’s dig deeper into what you really need to save for an early retirement, and why postponing it might make things easier.

Retiring in your mid-50s feels like a dream. You’re likely still active and have the energy to savor all that free time you’ve earned—well, at least, that’s what it seems.

However, early retirement comes with significant drawbacks. For starters, you won’t be eligible for Medicare or Social Security—which means you’ll have to seek health insurance independently, and, trust me, it can be pricey.

According to the Kaiser Family Foundation (KFF), by 2026, the average American could face health insurance premiums of around $625 a month, with couples potentially paying $1,250.

If you factor in an additional $10,000 monthly for household expenses, you’re looking at a portfolio that needs to generate roughly $135,000 annually in passive income.

To retire comfortably, you’d need a retirement portfolio of about $3.4 million. This is based on the assumption that you follow the 4% withdrawal rule, adjusting over time for inflation. The first year of retirement would see you withdrawing 4% of your nest egg.

But this is just the starting point. If your health circumstances are complicated—for example, if you or your spouse has a chronic illness—your insurance may cost more, and withdrawing money from pre-tax accounts might add tax burdens too.

It’s becoming clearer why the typical retirement age hovers around 62, according to a 2024 MassMutual study. That’s likely linked to when many become eligible for Social Security.

The Social Security Administration reports that in November 2025, the average monthly check for retirees was about $2,013.32. So, if you and your partner were to receive around $4,000 monthly in these benefits, your passive income needs would drop to about $87,000 annually—almost $50,000 less than if you aimed to retire at 55.

Thus, to retire at 62 under the 4% rule, you’d only require approximately $2.18 million in savings. That’s over a million dollars less than if you had chosen to retire earlier.

Of course, waiting even a bit longer to retire further eases the financial burden. By 65, you’d also benefit from increased Social Security and qualify for Medicare, which could significantly reduce your medical costs.

If your retirement benefits increase to $4,800 monthly, your financial needs again shift. You’d need $5,200 a month in passive income to maintain your monthly expenses of $10,000. To support this lifestyle based on the same 4% rule, your nest egg would decrease to around $1.56 million.

It’s a trade-off. Yes, I sacrificed ten years to reach this point. But, it also means fewer barriers and dims the risk of running out of money too soon.

If this trade-off seems reasonable, perhaps it’s worth reconsidering the allure of early retirement. A conversation with a financial advisor might help clarify things, ensuring you maximize your income while managing risks effectively.