Savvy investors know exactly when their 401(k) is big enough for them to call it quits — here's how to tell if your nest egg is ready

Here’s what we do know: Most Americans think 62 is the ideal age to retire, according to Pew Research data. But the reality is nearly half of U.S. workers end up retiring before they were planning to — and often for reasons outside of their control.

Almost 60% of workers told Allianz they worry they won’t be able to retire on their terms. And the most common factor holding them back was not having enough money saved.

Whether you’re dreaming of freedom 55 or preparing for the likelihood of clocking out sooner than you’d expected, here’s how to focus on finding a realistic number for your savings goal.

Rethinking your retirement

The typical American adult has a life expectancy for 79 years — the highest it’s ever been. That means if you retire at 62, you’re looking at a 17-year retirement.

Most conventional financial planning is based on this length of retirement. These plans also assume that you can rely on Social Security benefits because 62 happens to be the earliest age many Americans become eligible for these benefits.

But if you retire early, let’s say at age 55, and live to 83 — now you’ve got 28 years of retirement your savings need to cover. If you retire a few years earlier or live for a few years longer than that, you could be looking at a 35-year plan. And the longer you live, the more expensive your last years are likely to be.

It doesn’t matter how well you planned at one point. An additional three to 10 years could completely blow up any retirement plan. Major changes like that will mean you either need a bigger nest egg or a more conservative approach to withdrawals.

Don’t forget that you’re on the hook financially for plugging the gap between when you retire and when you qualify for Social Security and Medicare. And that’s also only getting more expensive these days.

With all this in mind, savvy investors may want to ensure their retirement savings is large and robust enough to withstand 40 years of inflation, market volatility and also bridge their financial needs until government programs become available to them.

How to build a 401(k) bridge to early retirement

Simply put, if you’re retiring early you need to be more disciplined and conservative in your financial planning. Your nest egg needs to be larger and your withdrawal rate needs to be lower.

Let’s take the example of Mia, a middle-aged professional. She’s on track to receive $25,000 a year in Social Security benefits at the age of 62 but estimates that her annual retirement costs could be $75,000 altogether.

If she retires at 62, her calculations suggest she needs a nest egg worth $1.25 million from which she can safely withdraw 4% to plug the $50,000 gap in her spending needs.

However, Mia hates her job and wants to retire early to focus on her hobby of home brewing beer. If she retires at 52, she needs a larger nest egg to deliver $75,000 a year until she’s eligible for Social Security benefits.