Sep 6, 2025
There’s a lot to consider when planning for retirement. Things like retirement savings and Social Security are often top of mind, but deciding when to retire can also be a tough thing to figure out.
That’s exactly the position Joyce and Gina find themselves in. They’re both 60 years old and had planned to work a few more years before retiring. However, restructuring and uncertainty at work has the couple rethinking their original plan.
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They currently have $2 million in retirement savings and a low-cost lifestyle, so the big question becomes: do they really need to keep working, or can they retire early?
There’s no standard retirement savings number that works for everyone. In fact, it all depends on how much money they’ll need in retirement. To figure out if Joyce and Gina are financially ready to retire now, let's get into the numbers.
The math on early retirement
According to a 2024 survey from Northwestern Mutual — reported by CBS News — the average American believes they’ll need $1.26 million to retire comfortably. That figure is actually down slightly from 2024, when the estimate was $1.46 million [1].
With $2 million in savings, Joyce and Gina are well ahead of that $1.26 million figure. If they were to retire today and withdraw 4% in the first year — while adjusting for inflation each subsequent year — that would give them $80,000 to spend in that first year of retirement.
Assuming a 4% annual withdrawal rate, 2.5% average annual inflation and a 6% average annual portfolio return, Joyce and Gina would be able to withdraw $88,200 in year five of retirement while their savings would sit at $2.03 million. In year 10, they’d be able to withdraw $99,700 with $2.1 million left in their savings.
By age 90, they’d still have a meaningful cushion — around $1.01 million, with a 4% annual withdrawal rate coming in at $163,000 — assuming the markets perform reasonably well and inflation stays moderate.
This plan also doesn’t include Social Security, which could add a significant income stream later in retirement. Assuming the 4% withdrawal rate mentioned above works for their lifestyle, Joyce and Gina can comfortably retire now while waiting until they turn 70 to apply for Social Security.
Waiting until 70 will maximize their monthly benefit checks. The earliest age to apply for Social Security is 62, but benefit checks are reduced for this early application age. For people born in 1964 (the year Joyce and Gina were born), the full retirement age is 67, at which point they can receive their full benefits [2].
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What to consider before deciding on early retirement
Retiring at 60 is doable for this couple, but it comes with some added risk. Here’s what Joyce and Gina should consider before making a decision:
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- Market downturns: If their portfolio drops early in retirement, they may need to withdraw a larger percentage than planned. This is known as the sequence-of-returns risk [3]
- Inflation spikes: The 4% rule accounts for moderate inflation, but if inflation exceeds expectations, Joyce and Gina’s spending power could erode faster than they had planned
- Health care costs: They won’t qualify for Medicare until age 65, and private insurance could be expensive in the interim. This could eat into their budget unless health care costs are carefully planned
- Longevity: There’s also the risk of Joyce and Gina outliving their savings. If they live well into their 90s, that $2 million needs to stretch nearly 35 years. However, Social Security may help bridge any gaps
So, should Joyce and Gina retire now? It really depends on the type of life they want to live. If they live modestly and have paid off their home and cars, that 4% withdrawal rate might be enough as a yearly budget. However, if they hope to travel, buy a new home or eventually need a new car, 4% annually may not work for two people.
Stepping away from a career and beginning to spend instead of save can be a difficult transition. But for this couple, the numbers suggest early retirement is within reach, especially if they’re willing to adjust their lifestyle and budget accordingly.
With a thoughtful withdrawal plan and realistic expectations, they could potentially enjoy their freedom now while keeping their future secure.
Article sources
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[1]. CBS News. “How much money do you need to retire? Here's what Americans say is their magic number”
[2]. Social Security Administration. “Retirement Benefits”
[3]. Investopedia. “Sequence Risk: Meaning, Retirement, and Protection”
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Danielle is a personal finance writer based in Ohio. Her work has appeared in numerous publications including Motley Fool and Business Insider. She believes financial literacy key to helping people build a life they love.
