How to Retire at 50 or 55

Editor’s note: This article is part of a series focused on how to retire early and the FIRE movement. To see all early retirement articles, jump to the end.

In some ways, deciding when to retire is as much a philosophical question as a financial one. While the average retirement age is 62, your options range from retiring very early to working into later life.

The "Financial Independence, Retire Early" (FIRE) movement has gained momentum as workers elect to power down their careers to pursue other passions. What path would make you happiest?

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Let’s consult a philosopher.

Aristotle recommended finding a happy medium, or mean, between two extremes. For example, don’t exercise too much and cause an injury, but not so little as to leave you out of shape.

His philosophy of finding a middle ground can be applied to the extremes of retirement planning: aggressively saving in order to retire in your 30s or 40s can affect your social life and lifestyle.

On the flip side, who wants to join the 20% of older adults in a recent TIAA survey who say they have no retirement savings, potentially forcing them to work indefinitely?

For many, retiring by 50 (or in your early 50s) offers a happy medium. It allows you to have a fulfilling career while still retiring early enough to enjoy your later years. Here are some steps to achieve this balanced approach to early retirement.

Determine how much you need to retire early by 50

Given an average U.S. lifespan is near 80, retirement starting at 50 could last 30 years or more. Since men and women have different life expectancies and average earnings trajectories, they need to plan separately and, if applicable, as a couple.

In general, men should follow the "Y rule" of retirement, which emphasizes proven investment strategies and relationship-building. Women should focus on longevity risk and implementing strategies for long-term care. Both sexes should make maintaining or even improving their health a top priority.

While personal circumstances vary, a common retirement planning guideline is to aim for 70% to 100% of your pre-retirement annual income to maintain your current lifestyle. If your income is $75,000 and you plan to retire at 50, aiming for a fund of about $2.25 million may be necessary (the math: $ 75,000 × 30 = $2,250,000). This guideline is just a back-of-the-envelope calculation that doesn't account for inflation or investment gains, and assumes you’ll need 100% of your pre-retirement income annually.

Try our online retirement calculator or consult a financial adviser for more precise planning.

You must also adjust assumptions about a healthy withdrawal rate from your investment accounts during retirement. Although retirees might typically assume that a 4% withdrawal rate from their invested savings will ensure they won't outlive their money in retirement, a longer retirement means that early retirees need to update their withdrawal rate in a FIRE scenario. That might mean only withdrawing 3%, for example.

Maximize retirement savings

To retire in your early 50s, you probably need to exceed ordinary savings rates.

A simple goal is to max out contributions to tax-advantaged retirement accounts, such as 401(k)s and IRAs, to leverage tax benefits and compound growth. The 2026 contribution limits for 401(k)s, IRAs and HSAs have all increased.

Your investment strategy should align with your income level. Higher earners might need less aggressive strategies, while lower earners might opt for a more aggressive, stock-heavy approach to compensate for fewer years of asset accumulation.

"About a fifth of millionaires buy used cars, spending less than 65% of their peers on vehicles."

Live well, but modestly

Retiring early at 50 doesn’t necessarily demand the extreme savings measures used by those who aim to leave the workforce in their 30s or 40s, but it does require careful spending. To maximize savings, consider opting for more modest vacations, homes and other significant purchases.

Redirecting the money saved from these choices towards your retirement funds can make a significant impact. For instance, consider buying only used vehicles.

As noted in "The Millionaire Next Door," about 37% of millionaires buy used cars. You may be able to save even more by buying a used EV.

Another way to spend less? You could retire abroad before 55 in a country with a cheaper cost of living.

Look for additional income

If cutting costs doesn't boost your savings enough, try to increase your income (or try both strategies). Beyond striving for promotions and raises, explore passive income, side gigs or freelance work.

Plan for health care before Medicare — and beyond

Medicare covers certain health care expenses, but it only becomes available when you turn 65. If you retire at 50, you’ll face a 15-year gap in health care coverage.

Options for coverage include continuing employer-provided insurance through COBRA (typically the most expensive option), purchasing a plan from the health care marketplace, joining a working spouse’s health plan, participating in a health care sharing program, or, though least advisable, going without insurance.

Among these, enrolling in a spouse’s plan is often the most cost-effective option, providing a bridge to Medicare eligibility without the high costs of other plans.

One of the biggest new impediments to retiring early is the growing cost of health care for those relying on the Affordable Care Act (ACA) marketplace. Congress allowed the program's subsidies for marketplace premiums to lapse in 2026, causing costs to soar for many relying on this type of insurance. The premiums are now so high that they might tank your early retirement plans if you don't have a workaround.

If you or your spouse have a Health Savings Account (HSA), consider maxing out your contributions while still employed. HSAs are powerful tax-advantaged tools you can employ to save for medical costs in retirement.

Unfortunately, you also have to think about health care after 65. Even though Medicare will kick in at that time, it won't cover all of your needs.

One of the biggest conundrums for retirees is how to pay for long-term care, since Medicare doesn't cover these expenses. A semi-private room in a skilled nursing care facility could run you more than $110,000 a year, according to a recent study by Genworth (PDF). If, God forbid, you are seriously disabled or have dementia later in life, you might need this care.

Social Security retirement benefits are unavailable until at least age 62. Therefore, your savings will likely be the primary source of income during early retirement, which can be tricky.

Traditional retirement accounts generally impose penalties for withdrawals before age 59½. Roth IRAs, however, allow penalty-free withdrawals of contributions at any time. Roth account earnings, on the other hand, cannot be withdrawn penalty-free until you reach age 59½ and the account has been open for at least five years, with a few exceptions.

This means you’ll likely need savings and investments outside of these plans you can tap, such as traditional savings or brokerage accounts. Just remember that selling investments might trigger capital gains taxes. Additional options, such as money market accounts, cash-value life insurance or annuities, could also supplement your early-retirement finances.

Don't assume you will start Social Security benefits at age 62, however. In fact, one of the most important decisions in your early retirement planning will be when to file for Social Security. If you're married, you'll need to consider your spouse's lifespan, retirement income and when to take Social Security relative to their retirement timeline.

Don't forget estate planning

You're working hard and saving to retire early, but remember that estate planning is an important part of your preparations. You can get a basic estate plan in place while you're working, then put a more detailed plan in place once you're retired and have time to focus. If you're concerned about the expense, there are ways to save money on estate planning.

Estate planning for women should consider the average longer lifespans and more frequent work interruptions women experience. If you are wealthy, estate planning for millionaires should also address specific issues, such as specialized trusts and tax planning.

How to retire at 55

If you find retiring early by 50 challenging, consider aiming for 55 instead, which offers additional benefits.

At age 50 and later, you can make catch-up contributions to your retirement accounts, allowing you to save an additional $8,000 in a 401(k) and $1,100 in an IRA.

Additionally, the IRS rule of 55 provides an opportunity to withdraw funds from your current 401(k) or 403(b) without penalty if you're laid off, fired or quit your job in the year you turn 55. This doesn't apply to former employers' 401(k)s, unless they’re rolled into your current plan.

Moreover, if you’re eligible for a pension, delaying retirement to 55 might help you meet certain criteria needed to maximize your pension benefits.

For high-net-worth singles or couples who do not qualify for a Roth IRA, consider a backdoor Roth IRA for its ability to grow tax-free. However, approach this option cautiously, as there are limitations and the tax code might change.

With these advantages, opting to retire at 55 could be a practical compromise for retiring early; or as Aristotle might call it, a nice, happy medium.