Is $4 Million Enough to Retire on at 55?

A $4 million nest egg will likely allow you to retire comfortably at age 55. The bigger challenge will be accumulating that much capital by 55 – about a decade before most people stop working. Other issues include the need to pay for private health insurance, waiting at least seven years for Social Security benefits, and penalties on early withdrawals from tax-advantaged retirement accounts.

A financial advisor can help you create a plan for a secure retirement.

Is Retiring at 55 with $4 Million Possible?

The average age at which most people retire is 64, according to a study by the Madison Trust Company. But if you have $4 million in savings, it’s entirely possible to retire by age 55.

Early retirement comes with several appealing benefits. Retiring at 55 can mean better health and potentially lower healthcare costs, more flexibility to pursue part-time work or passion projects, and the opportunity to enjoy a longer, more fulfilling retirement.

The biggest obstacle preventing many people from retiring at 55 is savings. Reaching a $4 million nest egg by that age requires careful planning, consistent discipline and often a bit of luck. It also involves years of strategic investing, budgeting and staying focused on long-term goals.

There are also logistical challenges to consider. Retiring at 55 means you won’t yet qualify for Medicare, Social Security or penalty-free withdrawals from traditional retirement accounts. You’ll need a strategy to bridge the financial gap until those benefits become available.

That said, if you’ve saved $4 million and don’t plan to live an excessively extravagant lifestyle, retiring at 55 is a very real possibility. With the right financial plan in place, early retirement can give you the freedom to design life on your terms.

How to Retire at 55 with $4 Million

A couple enjoying their retirement, having retired on $4 million at 55.

In order to know whether or not you can retire at 55 with $4 million, it helps to determine how much you expect to spend in retirement. One common approach is to use 70% of your pre-retirement income as a benchmark.

According to the Bureau of Labor Statistics data, Americans between 55 and 64 years old earned a median income of $65,936 per year, as of the fourth quarter of 2024. Seventy percent of this figure is $46,155. Of course, you might need more income depending on where you live, your health and healthcare expenses, and other factors.

The next question is how much income you can expect to generate in retirement. Many advisors use a safe withdrawal rate for estimation. According to this method, withdrawing between 3.3% and 4% of your nest egg in your first year of retirement, then adjusting subsequent withdrawals for inflation, could safely stretch your savings for 30 years.

Following this guidance, you could safely withdraw between $132,000 and $160,000 from your $4 million portfolio at age 55. That’s more than three times the $42,842 that an average 55 year old would need, meaning a $4 million nest egg should be enough to retire at 55.

Obstacles to Retiring at 55 with $4 Million

Accumulating $4 million by age 55 is a challenge. The conventional retirement saving approach of putting about 10% of your income into a tax-advantaged retirement account and investing it in a target date fund probably isn’t going to work unless you’re an exceptionally high earner. You may need to significantly reduce your pre-retirement living expenses, save as much as possible, and adopt a more aggressive growth-oriented investment strategy.

Your ability to withdraw money from your tax-advantaged retirement accounts is another major challenge that early retirement poses. Taking money out of a 401(k) plan and individual retirement account (IRA) before age 59.5 typically requires you to pay a 10% early withdrawal penalty on the amount that’s withdrawn, plus any taxes due. Four-plus years’ worth of early withdrawal penalties can take a serious bite out of your retirement savings.

Another issue with retiring at 55 is that you have to be at least 62 in most cases to draw Social Security benefits. This seven-year gap could leave you overly reliant on withdrawals from your portfolio, potentially exposing you to sequence of returns risk if the market takes a downturn.

Medicare is another valuable benefit that isn’t available for most 55-year-old retirees. Until you reach the usual qualification age of 65, your post-retirement budget will have to include paying premiums for private health insurance.

Bottom Line

A couple discussing, "Is $4 million enough to retire on at 55?"

With $4 million in savings, retiring at 55 is likely within reach. According to conventional financial planning estimates, that amount can generate enough income to support a comfortable lifestyle throughout retirement. However, there are a few challenges to plan for in the early years. You’ll need to cover your expenses without relying on Social Security, and accessing tax-advantaged retirement accounts before age 59½ could trigger early withdrawal penalties. Additionally, you’ll have to budget for private health insurance until you become eligible for Medicare at 65.

Retirement Planning Tips

Preparing a plan to fund your retirement is a lot easier with the help of an experienced and qualified financial advisor. SmartAsset’s free tool matches you with up to three 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.
One proven method for increasing your purchasing power in retirement is relocating to a lower-cost city when you stop working. SmartAsset’s guide to the lowest-cost cities for retirement can help point you in the direction of a comfortable retirement even if your income will be limited.