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Retiring early is popular, and for good reason. If you hit your financial targets early, why not step away from work and long commutes to spend more time with friends and family?
In fact, nearly 1 in 5 Americans say they want to retire before the age of 55, according to the data analytics company YouGov (1). But to retire comfortably, the majority of U.S. adults think they need a $1.28 million nest egg (2).
That’s no small number for most Americans.
And even if you’re already a middle-aged multimillionaire and have that “magic number” nest egg saved away in the bank, you might want to reconsider retiring as early as possible.
Why? The math is actually unforgiving.
Let’s say you want monthly spending needs of $10,000, adding up to $120,000 a year. Retiring at 55 instead of 62 or 65 dramatically increases the amount of money you need to get to those numbers because you’re too young to access two major safety nets — Social Security and Medicare.
Here’s a closer look at how much you need to save to retire early and why delaying could lower the barrier to entry.
Retiring in your mid-50s sounds ideal. You still have much of the health and energy needed to fully enjoy the leisure time you’ve earned, with decades of enjoyment ahead.
But early retirement comes with two major drawbacks: You don’t qualify for Medicare or Social Security benefits. That means you need to buy health insurance on the open market and cover the full cost yourself.
In 2026, the average American will pay $625 a month for health insurance in 2026, according to the Kaiser Family Foundation (3). A couple would pay $1,250.
That’s $15,000 a year just for health insurance.
Let’s also say — aside from health needs — that your household expenses are $10,000 a month. You’ll need a big enough portfolio to generate $135,000 in annual passive income to cover those basic needs.
To retire comfortably, then, you’ll need a retirement portfolio of $3.4 million if you follow the 4% retirement withdrawal rule, meaning you’d draw down 4% of your nest egg in the first year of retirement and then adjust that for inflation for the next 30 years.
And this simple calculation is just the tip of the iceberg. If you or your partner have chronic medical conditions, your health care premiums could be substantially higher.
Plus, if your wealth is tied up in pre-tax retirement accounts, like a 401(k) or traditional IRA, you’ll also need to account for taxes on withdrawals.
That’s why experts often suggest keeping 18 to 24 months’ worth of living expenses in your retirement emergency fund in case you won’t have a paycheck to depend on due to an unforeseen situation. You don’t want to lose money on paying taxes for those early withdrawals.
Ultimately, this all means early retirement is an expensive dream for most people.
It’s also why the average age of retirement is closer to 62, according to a 2024 study by MassMutual (4).
But does that mean retiring early is completely out of reach? Not necessarily.
A financial advisor can help you crunch the numbers, estimate how much you’ll need to save and figure out the earliest age you could realistically step away from work. And finding a reputable advisor is now easier than ever.
Advisor.com is a platform that matches you with FINRA/SEC-registered experts near you for free.
Here’s how it works: Simply answer a few questions about yourself and your goals, and Advisor.com’s AI-matching technology will comb through their roster of experts and match you with the best fit.
But hiring a financial planner isn’t just about getting quick advice — it’s about finding someone you trust to help guide your finances over the long term. That’s why you can set up a free consultation with no obligation to hire with your match to see whether you’re on the same page about your retirement.
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Even with the help of a financial advisor, it isn’t easy retiring in your 50s. That’s why the average retirement age is closer to 62 years.
That’s probably not a coincidence: It’s the age at which Americans first become eligible for Social Security.
That monthly benefit is central to most Americans’ retirement plans. In fact, the Senior Citizens League found that 27% of American retirees rely on it entirely, while 67% rely on it for more than half of their income (5).
And as of January 2026, the estimated average monthly Social Security check for retired workers was $2,070, according to the Social Security Administration (6).
Using the previous example, if you and your partner collect a total $4,000 a month in Social Security benefits between you, you’ll still need $87,000 in annual passive income to cover living expenses and insurance premiums.
That’s nearly $50,000 less than in the retire-at-55 scenario. Plus, you’d need a $2.18 million nest egg required to retire comfortably at this age and follow the 4% rule.
In other words, by delaying retirement a few years, your “magic number” drops by more than $1 million.
Wait a few years more and you reduce the required nest egg even further. The math works in your favor.
If that wasn’t enough for you, delaying retirement until the age of 65 has two key advantages: Your Social Security benefits increase and you become eligible for Medicare, reducing out-of-pocket health care costs (7).
Assuming your monthly household benefit payment jumps to $4,800, you’ll need $5,200 in monthly passive income to match your total spending needs of $10,000 a month.
Based on the 4% rule, you’d need a $1.56 million nest egg to enable this lifestyle.
And just like that, you’ve sacrificed 10 years of retirement to get here. But the barrier to entry is much lower and your risk of outliving your savings is greatly reduced.
If this tradeoff sounds fair, maybe it’s time to reconsider your dreams of early retirement — and consult with a financial advisor who can run the numbers with you to maximize your income and lower your risks.
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We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
YouGov (1); Schroders (2); Kaiser Family Foundation (3); MassMutual (4); Senior Citizens League (5); Social Security Administration (6); Medicare (7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.