How Much Do I Need to Retire at 55?

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retire at 55
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If you’re constantly dreaming about that morning coffee before a leisurely stroll, spending hours on a good book, or growing your own food, then early retirement might be something you should plan for.

Some people can retire at 55 if they heavily invested in their 401(k) or 403(b). This is due to an IRS provision that states that you don’t have to pay the additional 10% tax for early retirement plan distributions if you’re at least 55 years old.

However, a 401(k) or 403(b) is just one source of retirement income. And you’ll most likely need multiple sources of income if you want to live a comfortable life during retirement.

What is the Normal Retirement Age in the US?

If 55 is considered early retirement then what’s considered the normal retirement age?

Well in the US, the normal retirement age is 67 because that’s when you can collect all of the retirement benefits available to Americans.

Retirement Benefits and Minimum Age Requirements

Retirement Benefit Minimum Age Required
Social Security 62*
Medicare 65
Individual Retirement Account (IRA) 59 1/2
401(k) 59 1/2

*You can receive Social Security retirement benefits as early as age 62 but the distributions will be reduced by up to 30% depending on your year of birth. Full benefits are available at age 67.

How Much Money Do I Need to Retire at 55?

On average, you’ll need to have saved $1,051,814 to retire at 55 years old.

This is based on the median earnings of Americans according to the Bureau of Labor Statistics’ October 2023 Current Population Survey in weekly earnings. In combination with Fidelity Investments’ guideline of saving 10x your annual salary before retiring at 67.

With the median earnings in the US being $53,664 annually (based on the third quarter of 2023), you’ll need $536,640 in order to retire at 67. But since you’re looking to retire at 55, you’ll need to fund an additional 12 years.

If you plan to keep the same lifestyle in retirement, you’re going to spend roughly 80% of your annual pre-retirement income every year. Multiply that by 12 and you end up with an additional $515,174 that you need to save up for.

This brings us to our $1,051,814 figure that you need to save for before retiring at 55. But this is just an estimate and the actual amount needed by each person will vary wildly based on their lifestyle, investments, healthcare plan, and living situation.

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Retirement Lifestyle

The best way to determine whether or not you have enough money to retire is to live on your estimated retirement income for a month or two. Be sure to properly emulate the lifestyle that you want in retirement to get an accurate measure of things.

If you’re happy with the lifestyle that your retirement income can fund then you’ll know that you’ll be ready to retire at 55. If you end up having to go over budget though, then you might have to work a couple more years to fund your ideal retirement lifestyle.


Since your retirement benefits will be scarce if you retire at 55, you’re going to have to supplement your retirement income with investments. It goes without saying that you should be maxing out your contributions to your 401(k).

A Roth IRA is also a great plan for those who are looking to retire early even for those who already have a 401(k). Unlike a 401(k) though, a Roth IRA carries the 10% tax penalty for withdrawing your earnings at 55.

However, you can withdraw your contributions at any time without any tax or penalty from a Roth IRA. This of course reduces your future earnings but having the flexibility to dip into your tax-advantaged retirement account is invaluable to those who want to retire early.

You can also invest in high-yield savings accounts, index funds, bonds, and dividend stocks according to your risk profile.

Healthcare Plan

Medicare won’t be available until you’re 65, so you need to have a good healthcare plan in place until that kicks in. Depending on your medical expenses, the amount you need to retire at 55 might increase drastically.

Living Situation

One of the biggest factors in terms of calculating your ideal retirement fund is your living situation. If you own your home and the mortgage has been paid off then you’re going to have an easier time saving for early retirement.

If you’re renting or paying off a mortgage though, then that complicates things a bit. Resolving all of your outstanding debts should be your priority before planning for your early retirement.

Renting throughout retirement also throws a wrench into things considering the fluctuation of rent prices. So in this case, you might want to increase your target savings to account for this.

Tax & Inflation

As mentioned above, you can withdraw your 401(k) earnings at age 55 without the 10% tax penalty. However, it’s also important to note that 401(k) distributions will be taxed.

So you need to work that tax into your retirement budget and keep in mind that tax might increase over the years. You should also avoid withdrawing too much since that could get you pushed into a higher tax bracket.

Roth IRA distributions are tax free though since you pre-pay the taxes for this plan. This is another reason why it’s good to have both a Roth IRA and a 401(k).

Finally, you want to account for inflation when it comes to budgeting your retirement income. Which is just another way of saving more just to be safe.

Frequently Asked Questions

Can I retire at 55 with $1 million?

Yes, you can retire early with $1 million as long as you have multiple sources of retirement income and a retirement lifestyle fits that budget.

What is the ideal age to start planning for retirement at 55?

The ideal age to plan for an early retirement is 20 or earlier. It takes a lot of money to retire at 55, so the earliest start possible is recommended.

Can I continue working after retiring at 55?

For most people, semi-retirement at 55 is the most feasible option. Retiring at 55 requires a substantial amount of savings and investments.

Is it possible to retire at 55 if I haven’t saved much?

No, early retirement can only be achieved by proper planning which includes saving a lot of money.

How can I estimate my retirement expenses accurately?

The best way to estimate your retirement expenses is to live on your target retirement income for a month or two then account for 401(k) taxes and inflation.


On average, you’ll need to have saved $1,051,814 to retire at 55 years old. But the exact amount you’ll need will depend on the following factors: Retirement Lifestyle, Investments, Healthcare Plan, Living Situation, and Inflation.

Last Updated on May 05, 2024
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Disclaimer: The information provided in this website is for educational purposes only and should not be considered as financial advice. Consult with a financial professional for personalized guidance regarding your specific situation.

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