Jun 26, 2025
Patricia can see her retirement on the horizon. It’s tantalizingly close — she’s just turned 57 and stepping away from work has been made more tempting by the fact that she absolutely hates her job.
She’s ready to get out now, and put her happiness first. The only problem? She’s not sure if her $650,000 retirement savings will last.
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Patricia is facing perhaps the most hotly debated question for Americans approaching retirement age: how much do I need to have saved to retire comfortably? It’s a conundrum facing millions of American baby boomers, all of whom will be over 65 by 2030. Even choosing which method to calculate how much you need can be overwhelming.
The answer to when you can safely retire depends on several factors specific to an individual’s unique circumstances.
Be realistic about what your retirement will look like
Before retiring early, there are a few things Patricia should consider. If she sets a 25-year timeline for her retirement, her current savings would only allow for a modest $26,000 a year withdrawal. (Americans feel that they’ll need at least $1.46 million to retire on, according to a 2024 study by Northwestern Mutual.)
That amount does not include Social Security, but Patricia is not eligible to begin collecting until she is 62, and starting before she reaches the full retirement age will reduce her benefit. Since she was born after 1960, she will not qualify for a full benefit until she is 67.
Patricia can apply for Medicare when she is 65, but she should consider the cost of health insurance in the meantime if she is no longer covered by her employer’s plan.
Another vital consideration for retirees is whether they will be able to afford long-term care, should they need to move to a nursing home. There is a misconception among many Americans that Medicare covers long-term care; Medicare covers some skilled nursing facility care, while Medicaid covers nursing home-level care — but there are income and asset guidelines.
Retirees should also take into account any debts they may have accrued, and the possibility that other, unforeseen expenses may arise, such as home repairs and medical bills.
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Patricia also needs to do what many of us avoid: honestly consider how long she’s likely to live, and what her current lifestyle and overall health could mean for her future.
The current life expectancy for someone Patricia’s age is about 80 years. She also has to plan for the possibility that she could live longer than the average life expectancy.
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How to make an early retirement work for you
Before opting for early retirement, Patricia should make sure that the money she already has saved is working for her. She should consider her current and future tax brackets, and whether Roth conversions would be beneficial.
If her plan to draw down her retirement savings is based on the 4% rule, she should remember that it is based on a 30-year retirement, a balanced portfolio of stocks and bonds, and that the creator of the rule has said recently that given the current economic situation, 4% may be too conservative.
Retirees should also take into account the cost of living in their area, and whether they would consider retiring somewhere more affordable.
If early retirement is a nonnegotiable for Patricia, she should consider outside-the-box solutions to stretch her retirement savings. That could include downsizing and living more modestly, setting up a rental unit within her home to establish passive income or even considering a cohousing arrangement with other older adults — which could not only be a wise financial decision but also improve Patricia’s quality of life as she ages.
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Rebecca Payne has more than a decade of experience editing and producing both local and national daily newspapers. She's worked on the Toronto Star, the Globe and Mail, Metro, Canada's National Observer, the Virginian-Pilot and Daily Press.
