Early retirement at 55 is achievable but requires significantly more savings than retiring at 65. Here's the real math behind a 55-year-old retirement.
The Math
At 55, you need to fund 35-40 years of retirement (vs 25-30 years at 65). Using the 4% withdrawal rule:
- $50K/year spending: Need $1.25 million
- $75K/year spending: Need $1.875 million
- $100K/year spending: Need $2.5 million
The Healthcare Gap
Medicare doesn't start until 65. You'll need 10 years of private health insurance costing $500-$1,500/month per person. That's $60,000-$180,000 for a couple before Medicare kicks in.
Social Security Penalty
You can't claim Social Security until 62 (with a 30% permanent reduction). Full benefits at 67. Every year you claim early reduces benefits by 6.7% permanently.
The Strategy
Max out 401(k) and IRA contributions. Build a taxable brokerage account for pre-59.5 expenses (Roth conversion ladder). Target 25-33x annual expenses saved. Plan for healthcare explicitly.
