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What is Considered “Early Retirement” Age?

The common definition of early retirement is any age before 65—that’s when you qualify for Medicare benefits. Currently, men retire at an average age of 64, while for women the average retirement age is 62. Retiring before the traditional age of 65 can feel exciting and give you something to look forward to. So, whether you’re wanting to do some traveling, take up new hobbies, or simply start a new chapter in your life you’re going to need to have a retirement plan. Even if you’re one of the lucky few who don’t want or plan to retire, understanding what’s possible is very important as you enter the later stages of life.

Early Retirement Considerations

While there is research to show that working longer keeps you healthier and happier, there’s also evidence for the opposing view. The National Bureau of Economic Research found that “retirement improves both health and life satisfaction,” in part by factoring in the number of people who are forced to retire due to health issues.

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However, the primary challenge is ensuring that you have enough assets to provide an acceptable level of income throughout your remaining years, so you’re financially ready to live without a paycheck. The average lifespan in the U.S. is just under 79 years. For someone who retires at 55, this means they need to save up at least 24 years’ worth of income, and even healthier individuals who live beyond the age of 79 will need to have an even larger nest egg.

Social Security

While you’ll become eligible for Social Security at age 62, you won’t qualify for your full monthly benefit amount until a few years later—for those born from 1943-1954, it doesn’t happen until age 66. If you claim your benefits by 62, you only get roughly 75% of the full amount, which is adjusted because you’ll be getting checks for a longer period of time. Spousal benefits can also be decreased if you take your benefit early. Specifically, spousal benefits are reduced to 35% of your full retirement amount, compared to 50% if you wait until at least 66.If you plan on living a long time, delaying Social Security until age 70 can help you get the most value form the system you’ve paid into over your working years.


Medicare benefits start on the first day of the month in which you turn 65. If you retire before this age, you will need to consider alternative health insurance options, such as seeing if your former insurance plan will keep you grouped with the actively employed population as a retiree(a typically rare, yet lucrative benefit these days). Other options are COBRA, Health-Share, or joining your spouse’s plan if they are still working. Weigh your health insurance options to see which works best for you until your Medicare coverage begins.


If you have sufficient savings, retiring early may be more achievable than you think. Why? Many people assume their retirement money is off-limits until they reach age 59 1/2, but a special rule in most 401k plans allows penalty-free withdrawals from age 55 – 59 ½–only if you retire after your 55th birthday. If you still have money in your 401k plan from a former employer and assuming you weren’t at least age 55 when you left that employer, you’ll have to wait until age 59½ to start taking withdrawals without penalty. Additionally, if you have old 401k’s rolled into your current 401k before you retire from your current job you will have access to these funds penalty free when you retire from your current job.

As you save for retirement, it’s important to diversify your savings. Most people focus on filling up their 401k bucket, but remember you don’t want to neglect taxable or Roth (when possible) savings. Putting money in different account types (pre-tax, taxable, post-tax) can help you retire before age 59.5. It will also offer flexibility and possible tax savings if you can be strategic about the account types you withdraw from in retirement.

Suggested Next Steps for You

Many people can’t wait for the day when they finally call it quits on their careers. Still, constantly worrying about finances isn’t exactly the way to spend your later years. Before deciding to retire, use the Personal Capital Retirement Planner to see where you stand, and talk to a Personal Capital financial advisor to make sure you have the resources to meet your goals in this next chapter of life.

  1. Sign up for Personal Capital’s FREE financial tools to get a 360-degree view of all your money, track your spending and cash flow, analyze your portfolio, calculate your net worth, and project your retirement readiness. Knowing where your finances stand is a great first step in understanding if you are ready for early retirement.
  2. Consider speaking to a fiduciary financial advisor about your retirement plan.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Paul Deer, CFP®
Paul is a Certified Financial Planner® and has been with Personal Capital since they first moved to Denver in 2013. With over a decade of industry experience, Paul’s current role as Director of Advisory Service keeps him focused on a team of over 60 Financial Advisors and their clients.
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