How to Retire at 58: Step-by-Step Plan

Retire at 58, and you may be looking at a retirement that lasts four decades or more. Planning for that span of time means accounting for inflation and healthcare costs before Medicare. You’ll also face a delay in Social Security benefits. Meanwhile, consider how early withdrawals from retirement accounts are taxed and whether your savings can sustain growing annual expenses. You may want to consider working with a financial advisor as you put together your retirement plan.

Estimate Your Retirement Expenses

The first step is to determine the annual expenses you expect to incur in a comfortable retirement. This depends quite a lot on your lifestyle and personal needs, as well as where you live. A city dweller who rents will need to anticipate ongoing housing payments, for example, while a homeowner who owns their home outright will not. If you would like to travel and have adventures, that should be in the budget, while a homebody may need less cash on hand.

Don’t just ballpark this. Instead, go over your bank and credit card statements. If you wanted to maintain your current standard of living based on how much money you spend today, how much retirement income would you need per year? Start there, then adjust based on reasonable expectations.

If you’re young, don’t forget that your standard of living will probably increase. And don’t forget to account for insurance expenses during the seven years before you can enroll in Medicare. Finally, make a reasonable effort to estimate how inflation will affect your projected expenses.

Accounting for Healthcare Costs

This may be your single greatest retirement expense, as you’ll have seven years between when you lose employer benefits and when you become eligible for Medicare. First, find out what private insurance will cost after you retire. You can’t know for sure, but estimate how much you’ll need each year for premiums and other costs on a single-payer plan. Include that in your cost estimates when deciding how much you need to retire.

Second, determine how much additional money you will need for healthcare once you enroll in Medicare. Medicare reduces your expenses significantly, though not entirely, as Medicare is not a comprehensive program. This isn’t unique to early retirees, but everyone should prepare for medical costs.

For reference, a 65-year-old who retired in 2024 can expect to spend approximately $165,000 on health care in retirement, according to Fidelity’s annual Retiree Health Care Cost Estimate. Therefore, retiring at age 58 will mean spending considerably more since you’ll need to obtain private insurance for seven more years.

Planning Your Retirement Income

If you assume a 100-year life expectancy, retiring at 58 means that you’ll need 42 years’ worth of income. Suppose you need $50,000 from your investments in your first year. This will help you cover your living expenses. Since inflation reduces your purchasing power, you’ll need more than $50,000 in withdrawals each year after that.

If you expect to increase the size of your withdrawal by 2.5% each year to match the estimated inflation rate, you’ll need approximately $1.34 million in savings by age 58. This also assumes your investment portfolio will grow by a modest average of 5% year.

However, don’t forget to account for Social Security and any pension income you can expect to collect in retirement. You won’t be eligible to collect Social Security until age 62. Using a Social Security calculator, get an estimate of how much your benefits will be based on when you start to collect them. For reference, the average monthly benefit for a retired worker was around $1,980 per month in February 2025.

How Long Will Your Retirement Savings Need to Last?

Put bluntly, how long do you expect to live? Or to put it differently, for how many years will your nest egg need to provide for you? To retire at 58 you are essentially adding four, seven or 12 years to your retirement plan. While difficult to pin down, a conservative rule of thumb nowadays is to plan on living until you’re 100. This may seem like a stretch, but nearly a third of all retirees live into their 90s today. As healthcare continues to improve, that number will almost certainly improve every year.

You can use the Social Security Administration life expectancy calculator above, but financial advisors recommend adding five to 10 years to the results, depending on how conservatively you want to plan.

Don’t underestimate this. In addition to being less morbid, the risks of underestimating your own lifespan are serious. In your early retirement you can always try and go back to work, but in your 90s with failing health it will likely be impossible to do so.

Anticipating Your Income in Retirement

Cash flow in retirement will come from two sources, the government and private retirement savings accounts like IRAs and 401(k)s. It’s imperative to be clear-eyed about what each of these two sources can actually deliver.

Social Security Benefits

If you retire at 58 you will have anywhere from four to 12 years between when you retire and when you begin collecting Social Security. ou’ll need to save enough to cover this gap. The earliest you can start collecting Social Security benefits is age 62, though the monthly payments will be less than 100% of what you’d get if you waited to full retirement age, which is 67. Waiting longer than full retirement age to start getting these benefits increases the amount you will get.

However, beyond age 70, at which point you’re entitled to 124% of the monthly benefits you would have received starting at age 67, there are no more increases in monthly benefits. (Note: All figures in this article apply to people born in the year 1960 or later.) Also, keep in mind that you cannot enroll in Medicare until age 65.

In 2025, the maximum monthly benefit at full retirement age is $4,018, while the most a person can collect at age 70 is $5,108. On the other hand, the cap on benefits at 62 is $2,831 per month.

Retirement Account Withdrawals

If you want to retire at 58, you need to account for the rules that surround tax-advantaged retirement accounts. With a 401(k), you ordinarily cannot withdraw money penalty-free before age 59 ½. However, there is an exception called the Rule of 55. Under this rule, the IRS allows you to begin making standard withdrawals from a 401(k) account if you leave your job during or after the year you turn 55. This rule also applies to similar programs, such as a 403(a) or 403(b).

The Rule of 55 does not apply to IRAs and Roth IRAs. If you withdraw money from either of these programs before turning 59 ½ years old, again absent special circumstances, you pay extra taxes on the withdrawals.

For those retiring at 58, this is a relatively minor difference. You can begin making 401(k) withdrawals immediately and can begin withdrawing money from your IRA within 18 months of retirement at most. This means that, so long as you anticipate that 18-month gap, you can include your retirement accounts in your early retirement planning.

Managing Your Investment Portfolio’s Asset Allocation

The reason to think about asset allocation is because of how long your investment portfolio will have to sustain you. In other words, retirement doesn’t mean investors should rid themselves of stocks, according to Morningstar’s John Rekenthaler. Equity-heavy portfolios support higher safe withdrawal rates than bond-heavy ones. They may also produce significant surpluses even after 30 years of retirement spending. While past results don’t guarantee future performance, equities should play an even larger role in the investment portfolios of retirees. That’s all the more true given continual expansions of longevity.

“Should the future resemble the past, the lesson will remain valid. Retirees should invest heavily in equities, most likely more than they currently do,” Rekenthaler said. “But the advice rests upon that initial assumption.”

Building a Comprehensive Retirement Plan

Now that you’ve estimated what you’ll need each year in retirement, adjusted for inflation, you can move forward. You’ve also considered your life expectancy and totaled your expected income sources. With that information, you’re ready to put pen to paper and build a plan.

If it’s clear that your sources of money will not support the lifestyle you have hoped for then you will need to dial back some of the “wants” you have had for a retirement. On the other hand, if your sources of money are more substantial than you expected you may be in a position to live more luxuriously in retirement than you anticipated.

Keep an eye on this plan; it could need tweaking. Inflation may be different than you have calculated. Your investments may do better or worse than you estimated. Your healthcare needs may also increase, particularly if you end up needing long-term care. For reasons like this, it’s wise to work with a financial advisor as you create and update your plan.

Bottom Line

Planning to retire at 58 requires much the same process as planning for any stage of retirement. The key difference is making sure that you anticipate a gap in government benefits, as well as the loss of income during peak earning years. Aside from that you must estimate what you’ll need each year.

Retirement Tips

Consider working with a financial advisor as you plan for retirement. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with 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.
The hardest part of this process is the last step: calculating how you can build up your retirement savings. What do you need for retirement? How much should you contribute each year, and what kind of growth will you need to bring it all together? With SmartAsset’s retirement calculator you can begin to answer these questions for yourself.