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Early Retirement 101: Everything You Need to Know to Retire Before 65

Smiling senior couple sitting on the bench in the park together enjoying retirement

As of 2022, nearly half of all Americans expect to retire before they’re 62. This trend toward retiring early has been building over the last few years, but the pandemic and the Great Resignation have spurred it even further. It might leave you wondering, “Can I retire early, too?”

The average age for full retirement in the U.S. is 67, which shows many people still have to wait until they qualify for benefits such as Social Security and Medicare to leave their careers. This doesn’t mean early retirement is impossible, though. With a sound financial plan, you could start investing for early retirement now to help you reach your goals.

In this article, we’ll talk about a few different factors that can affect an early retirement, who early retirement is right for, and how to prepare to retire before you turn 65.

When Can I Retire?

This is a question that many people start to ask themselves as they near retirement age. Unfortunately, there’s not always a clear-cut answer. Many different factors can influence your retirement timeline, such as:

  • Healthcare costs
  • Social Security payments
  • Inflation
  • Lifestyle
  • Preparation

Healthcare Costs

Most people underestimate the cost of healthcare in retirement. Medicare doesn’t kick in until you reach 65, so if you retire early, you’ll be responsible for maintaining a healthcare plan out-of-pocket. The average cost of a healthcare plan for a 60-year-old is $970 per month. Maintaining that rate for five years until you’re eligible for Medicare would require $58,200 for the health plan alone. 

You also have to consider your personal healthcare needs and how they might change as you age. No one anticipates major health events, but older adults can be more at risk for certain health complications such as heart disease or stroke. You want to make sure your health plan can support any medical necessities that may arise and that you can sustain the extra cost of things like medications or doctors visits throughout retirement.

Social Security

Retirees often rely on their social security payments as part of their retirement income. It helps offset the amount you need to draw from your savings and might even cover a few of your monthly bills. These payments, however, aren’t available until you turn 62, and even then you only have access to partial benefits. 

If you retire early, you’ll have to determine what income you’ll use for daily expenses and cost of living until you can start drawing on your Social Security benefits. Keep in mind that if you can hold off on claiming these funds until you turn 70, your benefit amount will increase.


The rising rates of inflation have made it difficult to predict exactly how much money you’ll need to fully fund retirement. As prices go up, the cost of living across the country also increases. This can significantly impact how long your retirement savings will last. 

For example, Forbes uses the example of $1 million in retirement savings. At an even rate of inflation and return, estimating you need $50,000 a year to live on, your savings could last for 20 years. But if that inflation rate went up to 12%, that $1 million would only last half as long.

This might seem like a big jump, but inflation changes at those rates are happening now. U.S. inflation rates have quadrupled from their average between 2016-2019, shooting up nearly 6% from 2020 to 2021 and still rising. We saw in the example that these rates changes can mean the difference of a decade in retirement income, so it’s important to pay attention to them and time your retirement wisely to address those added costs.


Your desired retirement lifestyle can also impact how much savings you need to retire comfortably. For example, if you plan to travel the world in your retirement, you probably won’t be comfortable living on just $50,000 a year. 

To figure out when you can retire and enjoy the lifestyle you want, consider these three things:

  • Expenses – what will your monthly expenses be in retirement?
  • Current lifestyle – will your retirement lifestyle be different than your current lifestyle, such as more traveling or investing in hobbies?
  • Retirement income – what’s the total amount you can draw from your retirement accounts to make up your monthly income?

As you start crunching the numbers, you’ll find the amount you need to save to live comfortably each month in retirement. You can also use our retirement planning workbook to help you determine your desired retirement lifestyle and how to achieve it.


If you’re dedicated to retiring early, the most important thing to do is to prepare. With sound financial planning and a financial advisor to guide you, you can create a retirement plan that ensures you have enough money saved to reach your goals. 

Along with this plan, you need a realistic timeline. All too often, people won’t start thinking about retirement until they’re ready to turn in their notice at work. But retirement isn’t a snap decision. We recommend having a 3-5 year plan that gradually moves you toward a healthy financial position and sets you up to retire with the peace of mind that your accounts can sustain you for the rest of your life.

Is Early Retirement Right for Me?

The reason most people want to retire early is simply that they don’t want to work anymore. They might have a high-stress job such as working in corporate America or are tired of putting up with office politics. But even if this sounds like your situation, retiring early still might be a tough decision.

The truth is, it’s getting harder and harder to retire early. With interest rates still at record lows from the pandemic and inflation steadily rising, the cost of living continues to increase without much chance for people to earn money on their retirement investments. Even the 4% rule has come into question lately, with advisors suggesting this benchmark might not be enough to sustain retirees anymore.

So where does that leave you?

Your investment portfolio can tell you a lot about your readiness for retirement. Schedule some time with your financial advisor to review your accounts and assess how close you are to reaching your retirement goals. Remember, even if you can fully retire now doesn’t always mean you should.

One option for people who aren’t willing to keep working full-time is to transition to part-time work. This allows you to continue earning money and saving for retirement while also having more time to yourself. Working part-time even just for a few years can make a big difference when it comes to your retirement income.


Our advice to anyone who’s eyeing an early retirement is two-fold:

  1. Consider working one more year. It can be hard to wrap your head around spending another year at the office when you’re ready to retire, but that time can make a big difference for your investments. Sometimes one year is all it takes to create a much better retirement situation with greater odds that your income will last.COUPLES' COMBINED ANNUAL INCOME
  • Set up a financial plan. If you don’t already have a retirement plan guided by a financial advisor, it’s time to start. Your plan can help you stay on track with your desired timeline and advise appropriate distribution amounts when you start drawing on your retirement accounts. 

Early retirement can work if you’ve put in the necessary time and made a good plan. But the current economy and rising inflation rates can make sustaining your retirement more difficult. Meeting with your financial advisor to discuss the possibility of early retirement is the best way to get advice specific to your situation.

How Do I Prepare for an Early Retirement?

There are many aspects of an effective financial plan for people who want to retire early. At West Michigan Advisors, we like to focus on two aspects in particular: asset allocation and long-term saving.

Asset Allocation

Asset allocation is the mix of investments in your retirement portfolio. The goal of keeping a variety of investments is to mitigate risk based on your tolerance level. Early in your career, you can handle more risk in your investments because you have enough time to make up for any potential losses. Later in your career, however, your financial advisor is likely to start scaling back on risky investments in an effort to protect your nest egg.

As you get closer to your desired retirement age, it’s important to regularly discuss risk with your advisor. The first few years of retirement are when you’re most vulnerable, so you need to adjust your investments accordingly before you stop working. Your financial advisor can show you what risk exposure you currently have and suggest if it’s a good time to retire or if you should wait a little longer.


It’s not uncommon for people to worry if they’ve saved enough for retirement. It’s hard to know exactly how much money you’ll need for the rest of your life, but you can give yourself a competitive advantage by starting early. 

The earlier you start saving for retirement, the better. Even if you can only put a little bit in each month, having something in an account means you get to take advantage of compounding interest. And the longer your account is active, the more interest you can accrue. If you don’t have a retirement savings account already, it’s time to open one and start contributing.


Take the First Steps to an Early Retirement

When it feels like time to retire, your portfolio numbers will speak for themselves. Work with your financial advisor and retirement plan to discover what options you have and if you can comfortably retire within your desired timeline. 

To help you determine what you might need to have a stress-free retirement, download our retirement planning workbook.

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