Can I Retire at 60?

Retiring at 60 is an appealing goal for many workers who want to enjoy their healthy years free from full-time employment. But leaving the workforce five years early comes with unique challenges: no Medicare until 65, no Social Security until at least 62, and a longer retirement to fund. Use our free retirement calculator to see if you're on track for early retirement, then read on to understand exactly what it takes.

The Financial Requirements for Retiring at 60

You'll Need More Savings

Retiring at 60 instead of 65 means your savings must support five additional years of expenses before Social Security and Medicare kick in. If you spend $60,000 per year, that's $300,000 in additional savings just to bridge the gap, plus the healthcare costs we'll discuss below.

Beyond the bridge years, your money needs to last longer overall. A 60-year-old who lives to 90 needs 30 years of retirement income, the same as someone retiring at 65 who lives to 95. But life expectancy improvements mean many 60-year-olds will live well into their 90s.

The Numbers: How Much Do You Need?

Using the 4% rule as a starting point, someone planning to spend $60,000 per year would need $1.5 million. But early retirees often use a more conservative 3.5% withdrawal rate to account for the longer time horizon, which increases the target to $1.7 million.

Add in the bridge years before Social Security and healthcare costs before Medicare, and a 60-year-old retiree spending $60,000 per year might need $1.8 to $2 million or more depending on their specific situation.

The Healthcare Challenge

Healthcare is the biggest obstacle to retiring at 60. Medicare doesn't start until 65, leaving a five-year gap where you need alternative coverage.

Your Options Before Medicare

COBRA: You can continue your employer's coverage for up to 18 months, but you'll pay the full premium (often $1,500 to $2,500 per month for a couple) plus a 2% administrative fee. This is expensive but provides seamless coverage.

ACA Marketplace: The Affordable Care Act marketplace offers plans regardless of pre-existing conditions. Premiums vary widely by location and age, typically $800 to $1,500 per month for a 60-year-old couple. Subsidies are available based on income, and in retirement, you may qualify for significant help.

Spouse's Coverage: If your spouse is still working, their employer plan may be the most affordable option.

Part-Time Work with Benefits: Some employers offer health benefits to part-time workers. This can provide affordable coverage while supplementing your income.

Health Sharing Ministries: These are not insurance but cost-sharing arrangements among members. Premiums are lower, but coverage has limitations and is not guaranteed.

Budget for Healthcare

Plan to spend $15,000 to $30,000 per year on healthcare for a couple before Medicare. That's $75,000 to $150,000 for the five years between 60 and 65. This expense alone requires significant additional savings beyond your normal retirement target.

Social Security Considerations

You Can't Claim Until 62

Even if you retire at 60, the earliest you can claim Social Security is 62. That leaves at least two years where you must fund all expenses from savings and other sources.

Early Claiming Reduces Benefits

Claiming at 62 instead of your full retirement age (66 to 67 for most people) permanently reduces your benefit by 25% to 30%. Waiting until 70 increases your benefit by about 8% per year over your full retirement age.

For a 60-year-old retiree, the question is whether to claim early and reduce portfolio withdrawals, or wait and maximize the guaranteed inflation-adjusted income Social Security provides. There's no universal right answer; it depends on your health, other income sources, and portfolio size.

Consider the Long Game

If you're healthy and expect to live into your mid-80s or beyond, delaying Social Security often makes sense. The higher benefit provides valuable longevity insurance, especially important for early retirees who face a longer retirement.

Income Sources to Bridge the Gap

Taxable Investment Accounts

Money in regular brokerage accounts can be accessed at any age without penalty. This is often the primary funding source for early retirement years.

Roth IRA Contributions

You can withdraw Roth IRA contributions (not earnings) at any age without taxes or penalties. If you've been contributing for years, this can provide a tax-free income source.

Rule of 55

If you leave your job in the year you turn 55 or later, you can withdraw from that employer's 401(k) without the 10% early withdrawal penalty. This doesn't apply to IRAs or previous employers' plans.

72(t) Distributions

Substantially Equal Periodic Payments (SEPP), also known as 72(t) distributions, allow penalty-free withdrawals from retirement accounts before 59.5. You must take payments for at least five years or until 59.5, whichever is longer. The calculation methods are complex, and mistakes can trigger penalties on all withdrawals.

Part-Time Work

Many early retirees work part-time, either by choice or necessity. Even modest income of $20,000 to $30,000 per year dramatically reduces portfolio withdrawals and extends how long your savings last. Consulting, freelancing, or turning a hobby into income are popular options.

Lifestyle Considerations

What Will You Do?

Five extra years of retirement sounds great, but you need a plan for how you'll spend your time. Research shows that retirees who stay active and engaged are happier and healthier than those who struggle to fill their days.

Before retiring at 60, consider:

• What activities will give you purpose?
• How will you stay socially connected outside of work?
• Do you have hobbies or interests to pursue?
• Would part-time work provide structure and engagement?

Your Spouse's Timeline

If you're married, consider your spouse's retirement plans. Retiring at different times can create tension, especially if one person is still commuting while the other is free. On the other hand, staggered retirements can provide continued income and healthcare coverage.

Is Retiring at 60 Right for You?

Retiring at 60 makes sense if:

• You have sufficient savings to bridge the gap to Social Security and Medicare
• You've planned for healthcare costs before 65
• You have a clear vision for how you'll spend your time
• Your health allows you to enjoy active retirement years
• You're prepared to be flexible with spending if markets underperform

It may not be the right choice if:

• You're significantly behind on savings
• Healthcare costs would deplete your savings
• You derive significant satisfaction from your career
• Waiting a few more years would dramatically improve your financial security

Run the Numbers

The only way to know if you can retire at 60 is to model your specific situation. You need to account for:

• Healthcare costs from 60 to 65
• Living expenses before Social Security
• Your Social Security benefit at different claiming ages
• How your portfolio would perform across different market scenarios
• Tax implications of different withdrawal strategies

This is where Monte Carlo simulations become invaluable. Instead of assuming a fixed rate of return, you can test your plan against thousands of possible market scenarios and see your probability of success.