Can I Retire With $1 Million Dollars at 55?

Retiring at 55 with $1 million in savings may not be the norm, but for some, it’s a real possibility. While $1 million doesn’t stretch as far as it once did, especially with rising healthcare costs and inflation, it can still provide the foundation for a secure and fulfilling early retirement. The key is knowing how to make your money work smarter and last longer. If you’re aiming to retire at 55, now’s the time to build a plan. A financial advisor can help you run the numbers, optimize your asset allocation and create a retirement income strategy for your goals.

Can I Retire With $1 Million at 55?

Retiring with $1 million at age 55 might not feel as secure as it once did, especially with inflation and rising healthcare costs, but it’s still within reach with the right strategy. According to Barron’s, some retirees believe they’ll need $3 million or more to live comfortably. However, $1 million can still offer financial freedom, especially if you plan carefully, maintain a reasonable lifestyle and account for income gaps before Medicare and Social Security kick in.

Early retirees will need to consider how to stretch their dollars to last decades, often 30 years or more. Planning for taxes, investment returns, healthcare and lifestyle goals is key to avoiding unpleasant financial surprises.

If you’re considering leaving the workforce at 55, a financial advisor can help you create a realistic retirement strategy.

Is $1 Million Enough to Retire at 55?

When planning to retire at 55 with $1 million, the main question you’ll ask yourself is: Can this amount realistically support you for the rest of your life?

This is where the 4% rule comes in. With this rule, you’d withdraw 4% of your retirement savings in the first year and adjust each subsequent year’s withdrawal for inflation. On a $1 million portfolio, that’s an initial withdrawal of $40,000. If markets perform well and inflation stays moderate, your savings could last 30 years or more.

But what if, in retiring earlier, you decide to be a little more cautious? At a 3% withdrawal rate, you’d start with $30,000 annually, providing a longer runway for your portfolio, particularly if you anticipate a longer lifespan. More aggressive retirees might look at 5% or even 6%, which translates to $50,000 or $60,000 in the first year of retirement. This can help you meet your income needs while you’re waiting to claim Social Security, but it does come with greater risk, especially early in retirement.

Ultimately, whether $1 million is enough depends on your spending needs, health and whether you expect additional income from Social Security or part-time work.

Other Factors Affecting Retirement at 55 With $1 Million

Retiring at 55 presents some unique financial challenges and opportunities. Here are several key factors to keep in mind.

Retirement Portfolio Basics and Taxes

Because you’ll be accessing retirement funds before age 59.5, withdrawals from traditional IRAs and 401(k)s could trigger a 10% early withdrawal penalty. However, there are exceptions, such as IRS Rule 72(t), which allows for penalty-free withdrawals via substantially equal periodic payments (SEPPs). Roth IRAs offer more flexibility, as contributions (but not earnings) can be withdrawn tax-free at any time.

Relying on a taxable brokerage account for your early retirement years can offer more flexibility and lower your tax liability. However, any investment gains from those accounts may be subject to capital gains tax. For instance, if you sell $50,000 in appreciated assets and $30,000 of that is a taxable gain, and you’re in the 15% capital gains bracket, you’d owe $4,500 in taxes on that sale.

You can use our free capital gains tax calculator to get an idea of your tax liability.

Location and Lifestyle

Where you choose to live matters. Retiring in a state with no income tax – like Florida, Nevada or Texas – can significantly extend your savings. Likewise, rural or lower-cost regions can reduce your overall expenses. If you plan a modest lifestyle, $1 million may be enough. But if you intend to travel or maintain a high-cost lifestyle, you may need to stretch further.

Inflation

Even low levels of inflation erode purchasing power over time. A 2.5% annual inflation rate can reduce your money’s value by nearly 50% over 30 years. That means today’s $40,000 budget might need to be $70,000 in a few decades. Make sure your investments include assets like equities that offer inflation-beating potential.

Health and Longevity

Healthcare expenses are a significant retirement cost, particularly if you retire before Medicare eligibility at 65. A 55-year-old couple should plan for 10 years of private insurance costs, which may be $10,000 a year or more depending on coverage (according to a recent breakdown from SmartFinancial). Longevity also plays a big role, too. If you live to 90 or beyond, your retirement could last 35-plus years.

Retiring at 55 With $1 Million – Social Security and Medicare

A man researching if he can retire with $1 million at 55.

One of the most pressing concerns for early retirees is bridging the gap before Social Security and Medicare. You can begin collecting Social Security as early as 62, but waiting until full retirement age (typically 67) or even 70 will increase your monthly benefits. For example, for 2025, claiming benefits at the full retirement age of 67 could get you a maximum benefit of $4,018. However, if you claimed at 62, your maximum benefit would be $2,831. If you waited until 70, your maximum benefit would be $5,108.

Delaying benefits also gives your portfolio more time to grow.

Until Medicare kicks in at 65, you’ll need to cover your own health insurance. Options include COBRA, ACA marketplace plans or health sharing ministries. Budgeting for healthcare is essential. As we mentioned above, private health insurance could cost $10,000 a year or more.

Create a Retirement Budget

Here’s a sample retirement budget for a 55-year-old living on a $40,000 withdrawal from a $1 million portfolio:

Housing (Rent/Mortgage, Taxes, Insurance): $16,800 ($1,400 a month according to LendingTree)
Utilities and Maintenance: $4,000
Groceries and Dining: $7,200
Healthcare (Premiums and Out-of-Pocket): $10,000
Transportation: $3,600
Travel and Entertainment: $3,200
Miscellaneous and Emergency Fund: $2,000

Total Annual Expenses: $46,800

This sample budget assumes homeownership and a modest lifestyle in a lower-cost region. Your numbers may vary depending on personal circumstances.

Managing a $1 Million Portfolio at 55

Managing a retirement portfolio at 55 requires balancing income generation with long-term growth. A commonly recommended allocation for early retirees might be 60% equities, 30% fixed income and 10% cash or liquid reserves. This allows growth potential while managing volatility.

You’ll want to prioritize tax-efficient income sources. For example, dividends and long-term capital gains are taxed at favorable rates. Withdrawals from taxable brokerage accounts first, followed by tax-deferred accounts, can help minimize taxes over time. Roth IRAs, used last, can preserve tax-free income for later years or for heirs.

Annuities

Annuities can also provide predictable income in retirement. A single premium immediate annuity (SPIA) converts a lump sum into guaranteed lifetime income, helping to cover basic expenses. Alternatively, deferred annuities begin payouts later in retirement and can serve as longevity insurance.

While useful, annuities aren’t right for everyone. They often come with fees, limited liquidity, and potential complexity. Carefully compare options and consider working with a financial advisor to determine if an annuity fits your overall plan.

Bottom Line

A couple enjoy their retirement at 55 with $1 million.

Retiring at 55 with $1 million is possible, but only with thoughtful planning, disciplined budgeting and a long-term investment strategy. While $1 million may not offer extravagant luxury, it can provide a comfortable, financially secure lifestyle in retirement, especially if you’re strategic about where and how you live. By addressing the gaps before Medicare and Social Security, managing taxes and inflation, and tailoring your asset allocation, you can make early retirement a reality.

Retirement Planning Tips

When you’re planning out your finances for retirement it can be as important to look at spending. T. Rowe Price says to start by assuming you’ll spend 75% of your pre-retirement income. However, a financial advisor can help determine an accurate spending expectation for retirement. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you’re not sure how much you need to have saved for your golden years, consider using SmartAsset’s free retirement calculator. Our tool will give you an estimate based on when you plan to retire, how much you’re currently saving, your annual retirement expenses and more.
Looking to relocate so you can retire early? Check out SmartAsset’s recent study on the Best Cities for an Early Retirement.