Jul 5, 2026
The average retirement age in the U.S. hit 64.6 for men in 2024, while women retire at an average age of 62.6. This is around three years later than the average retirement age in 1994.
Changes in Social Security rules (like full retirement age moving later), along with changes in the nature of work, have all contributed to people staying on the job longer. But not everyone wants to work until their mid-60s.
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Let’s pretend, for example, that Bob is 50 years old and really wants to retire at 62. Bob is making $150,000, he’s got $500,000 saved already, and he’s contributing 6% to his retirement investment account with no employer matching contributions. He’s also earning a 7% average annual return.
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So, will he be able to hand in his notice on his preferred schedule and start enjoying life as a retiree? Let’s take a look at the numbers and some expert advice to find out.
Will Bob have enough invested for retirement?
Figuring out whether you’re on track to retire doesn’t have to be complicated. It just requires a little math to see how much money you’ll end up with. Bob can calculate the numbers himself using the tools available at Investor.gov.
For now, let’s say Bob is making $150,000 and is putting away 6%. That’s $9,000 per year he’ll add to his 401(k).
“At a 7% average growth rate, he would have about $1,281,685 in a retirement nest egg at 62,” Domenick D’Andrea, founder of DanDarah Wealth Management, told Moneywise. “This is a very nice start to being able to retire at 62.”
But is it enough?
“As we all have different monthly bills and different lifestyles, one man could retire very comfortably on this amount, and one man could overspend and run out of money,” D’Andrea said.
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Bob must look at his income needs in retirement
Figuring out how much money he’ll end up with is the first step. But as D’Andrea pointed out, his income needs matter, too. Bob’s ability to retire hinges on whether his retirement income from all sources can cover his spending.
Most experts recommend that you aim to replace around 70% to 80% of pre-retirement income. For Bob, that would mean he’d need around $105K at a 70% replacement rate. He can’t just take all that money out of his 401(k), though. He must pick a safe withdrawal rate.
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The 4% rule is commonly used to do that and involves limiting withdrawals to 4% of your balance in year one, then adjusting for inflation. So, a $1,281,685 nest egg would produce $51,267.40.
That’s not enough by itself. Of course, Bob becomes eligible for Social Security at 62 and can supplement his investment account withdrawals with that money. Unfortunately, he’ll shrink his standard benefit by 30% if he claims at 62 when his full retirement age is 67.
Lots of factors go into calculating Social Security, but generally benefits replace around 40% of pre-retirement income. However, since Bob gets hit with early filing penalties, let’s assume he’ll end up with around $42K. He’d have about $93,000 total to spend, which doesn’t get him to a 70% replacement rate. And remember, that’s the lower end of the scale as far as expert recommendations go.
If Bob wants to be frugal, it could be doable, but he also must factor in the cost of big expenses like costly private health insurance until Medicare starts at 65.
Upping his savings could help him stay on track
If Bob wants to be sure he has enough, he may need to do better than just saving 6%. Of course, if his employer matches 401(k) contributions, that could help. He could also try to invest more aggressively to earn higher returns, but that would mean taking bigger risks.
Ultimately, since Bob is over 50 and eligible for catch-up contributions, and since he wants to retire at a pretty young age, he really should be focused on investing more. An advisor can help him figure out how much he needs if he really wants to be sure he’s ready for retirement.
“I would suggest that you sit down with a financial professional and look at your budget,” D’Andrea advised. “You should review these numbers at least on a yearly basis to make sure that you are still on target.”
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
