How to Retire at 60: Step-by-Step Plan

The traditional age of retirement is 65, but it’s possible to retire at age 60 with planning. Obstacles to early retirement include lack of access to Social Security benefits and Medicare. However, on the plus side 60-year-olds can withdraw from retirement accounts without penalty. Early retirees may also benefit from lower healthcare costs, improved ability to work part-time, and a longer and more enjoyable retirement.

A financial advisor can help you figure out how to retire early or achieve other long-term goals.

Obstacles to Retiring at Age 60

Although it’s five years earlier than the traditional retirement age, 60 is close to when most people actually retire. According to a November 2024 study published by the Transamerica Center for Retirement Studies, the median retirement age is now 62. ¹ Furthermore, nearly a third (29%) of people enter retirement between ages 60 and 64.

A key reason for the popularity of 62 as a retirement age? This is the earliest age at which most people can qualify to receive Social Security benefits. Disabled people are usually the only ones who can get Social Security payments before age 62.

In fact, age 62 is the most popular age for claiming benefits, data from the Social Security Administration shows. In 2022, 28.8% of Social Security recipients claimed their benefits at age 62, while only 10% waited until 70. ² However, claiming Social Security at age 62 will reduce your lifetime benefit by up to 30%. Waiting until age 70, on the other hand, will increase your benefit by up to 32%.

Access to Medicare is another reason why retiring at 60 can be challenging. Except for the disabled, people don’t normally become Medicare-eligible until the month they reach 65. The national healthcare program offers important assistance for coping with a potentially heavy financial burden of medical costs in later years.

Retiring at age 60 beats retiring earlier in one big way. Withdrawals from tax-advantaged retirement accounts including IRAs and 401(k) plans are subject to a 10%penalty until age 59 1/2. After that, there’s no penalty, although ordinary income taxes still apply.

Basics of Retiring at 60

Retiring successfully at any age requires balancing income with expenses. So, the first step in planning an early retirement is to decide how you want to live and how much income it will take to support that lifestyle. Next, you find out how much post-retirement income you can generate from investments, part-time work, or other sources.

Then you compare the two figures.  If the income result is inadequate, it may be necessary to adjust the post-retirement lifestyle expectations or to change investment strategy or work plans to generate more income.

Steps For Retiring at 60

The first step for retiring at 60 is to determine how much money you’ll need. A rule of thumb for projecting necessary retirement income is to take pre-retirement income and multiply it by between 70% and 90%. For instance, if you are earning $100,000 a year before retiring, this benchmark suggests you probably can maintain your lifestyle on between $70,000 and $90,000 a year.

This rough guideline may need adjustment for individual situations. Early retirees, for example, won’t have Medicare. They may have to budget for private health insurance premiums. If so, their post-retirement income needs may be higher.

On the other hand, it may take less than 70% of pre-retirement income if the retiree cuts costs significantly by, for example, downsizing and moving to a place with lower costs of living. Paying off debt before retiring can also lower cost of living.

The second step is to actually save the money. Use a workplace retirement account like a 401(k), an individual retirement account or any other method that works for you; just make sure you’re adjusting your asset allocation over the years to fit your situation.

The 4% Rule

Finally, you need to plan how you’ll withdraw your money in retirement. The often-cited 4% rule suggests that if you withdraw about 4% from a balanced portfolio in your first year of retirement and then adjust your subsequent withdrawals for inflation each year, your nest egg should last for at least 30 years. With this rule in mind, in order to withdraw $70,000 in year 1 of retirement, you would need $1.75 million in savings. If you decided that you needed $90,000 in initial retirement income, you would need $2.25 million, according to the 4% rule.

If your retirement nest is inadequate according to this guideline, it’s possible to be more aggressive and withdraw more than 4%. However, this may not be as safe. It’s also possible to adopt a more aggressive investment strategy that could generate more returns and allow a higher withdrawal rate. However, again, this involves taking on a greater risk of running out of money.

Other ways to increase income include making maximum contributions to tax-advantaged retirement plans while stile working, starting a taxable investment program and considering part-time work after retirement.

Other Early Retirement Considerations

Bear in mind, you will only have to pay living expenses entirely out of investments until you claim Social Security. These benefits can make a big difference. The maximum annual benefit for people who claim at 62 in 2026, for example, is $35,628. ³ And the maximum benefit for people who wait until age 70 to claim is $62,172. Any number of individual circumstances can significantly affect retirement age decisions. For instance, many people can count on pension income in retirement.

Life expectancy is also an important variable because it increases the number of years a nest egg has to last.

How Can a Financial Advisor Help You Create a Plan to Retire at 60

If you plan to retire at 60, advice often becomes relevant once you see the gap between leaving the workforce and gaining access to Social Security and Medicare. During this period, you must rely on savings to cover living costs, taxes, and health insurance without employment income. That timing mismatch increases pressure on withdrawal decisions and portfolio structure.

You face several interrelated choices at this stage. You must decide when to claim Social Security, how many years your investments must provide full income support, and whether part-time work plays a role. Figure out which accounts to draw from first and how much taxable income you’ll need to generate each year.

A financial advisor can build year-by-year cash flow projections starting at age 60. This includes estimating spending, mapping withdrawals across taxable accounts, IRAs and 401(k)s, and projecting federal and state taxes. These projections show how different withdrawal sequences affect tax brackets and remaining balances over time.

Healthcare planning before age 65 requires detailed analysis. An advisor can estimate private insurance premiums, expected out-of-pocket costs and the effect of health expenses on annual withdrawal needs. This allows you to see how pre-Medicare years change the total income your portfolio must support.

Social Security timing introduces long-term tradeoffs. Claiming at 62 lowers monthly benefits, while delaying raises them but requires larger early withdrawals. An advisor can model how each option changes lifetime income, portfolio drawdown rates, and the risk of running out of assets.

Retiring at 60 extends the period your savings must last and shortens the remaining time to adjust. Market volatility, taxes, and spending changes have a larger impact when withdrawals begin earlier. Advisor analysis ties these risks directly to timing so you can see whether changes are needed before retirement or in the early years after you stop working.

Bottom Line

Retiring early at age 60 is doable, with adequate planning. It may take some sacrifices in saving more money now or reducing expected post-retirement living standard. However, it’s only a few years before most people retire anyway.

Tips on Early Retirement

• A financial advisor can offer valuable advice on how to arrange your finances so you can retire early. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Your Social Security benefit depends on the year you were born, annual income, marital status and age of retirement. SmartAsset’s Social Security benefit calculator takes all these factors into consideration to estimate your benefits, including inflation.

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