There really isn’t a definition of early retirement. Some people use 62, the age at which Americans become eligible for Social Security. (The payments are higher if people wait to sign on at a later age, but the calculation is personal and is often based on financial circumstances and health.)
Other analyses figure early retirement from 59½, the age at which people can withdraw funds from 401K or Roth IRA accounts without taxes or penalties. On the other hand, since 65 is the traditional retirement age, there is a case to be made that people can retire as late as 64 and still fall into the “early retirement” category. (This is the number of retired people in every state.)
One thing is certain. Much of what people need to do to retire early is what they have to do to retire at all.
Those who retire early do have to make some plans that might not be as important to people who retire at 70 or later, however. Certainly, those who retire at 62 should plan to live at least another two decades. According to the National Center for Health Statistics’ National Vital Statistics System, U.S. life expectancy in 2020 was 77.8 years — but almost 10% of Americans live to be 85 or older.
Remaining healthy becomes a bigger challenge as people age, no matter how early they retiree. Obesity and cardiovascular diseases become larger risks. Older people are more likely to suffer from Type 2 diabetes. Exercise and a good diet are important for everyone, but that importance increases with age.
Part of what people need to do is prepare as early as possible for the conditions age often brings. Among these are financial plans for disability. Some people begin to live on a single floor in the anticipation of less mobility. Still others have to do with planning for medical care which may become more frequent as they age.
Another part of retiring early has to do with finances. The story is that F. Scott Fitzgerald once said to Ernest Hemingway, “You know, the rich are different from you and me,” to which Hemingway reportedly replied “Yes, they have more money.” This applies to retirement. People need to fund their lives for at least two decades. That means those of modest means may need to sell their homes to be able to afford retirement. Others may need to move to places with lower costs of living. Consider what it costs to retire comfortably in every state.
We looked at what early retirement may require, and here is what we found.