How much money do you really need to retire? There’s no single answer—and honestly, it’s a moving target. Case in point: the latest data from Northwestern Mutual’s 2025 Planning & Progress Study reveals that Americans now believe they’ll need $1.26 million to retire comfortably.
However, when you see a title like “Is $1.1 Million Enough to Retire Early?” from one of my previous YouTube videos, it’s easy to feel optimistic. After all, with a million bucks, you’ll have financial freedom, no more commutes, and finally control your schedule.
But here’s what I’ve learned from personal experience and advising clients over the years: $1 million doesn’t mean what it used to. In fact, it’s becoming increasingly common. Even though it’s still a milestone worth celebrating, it may not be the retirement safety net many anticipated—especially considering inflation, healthcare costs, and the potential to live off that money for decades to come.
For example, consider Byron, a thoughtful podcast listener who recently emailed with the following question: “I have $1.1 million in my 401(k) and plan to retire at 56. Who should manage my money after I retire? I want the best bang for my buck, but I still want my investments to perform well.”
Now, Byron is already ahead of the game, having saved diligently and asking intelligent questions. However, I see a red flag with that word “after.” If you’re planning on retiring early, the real planning doesn’t begin after you retire. Instead, it has to start before—well before, to be precise.
The Fatal Flaw: Waiting Until “After” to Plan Your Escape
As you can see, Byron’s question is more than just finding a good money manager. Often, people don’t formulate a comprehensive retirement plan until after they’ve quit their careers. Think about it—you wouldn’t jump out of a plane and then figure out how to deploy your parachute, right? Similarly, early retirement is a leap of faith, and your financial plan is your lifeline.
There’s more to retirement planning than picking the hottest stocks or the lowest-fee index funds. Before receiving your last paycheck, it’s a holistic process that involves dissecting your current financial situation, projecting decades into the future, and making strategic decisions based on what you determine to be the best course of action.
The Real Questions That Will Make or Break Your Early Retirement
An experienced Certified Financial Planner (CFP®) won’t just glance at your $1.1 million and say, “Good for you.” He or she will dig deep and ask the tough, critical questions determining your early retirement security and longevity. Instead, they’ll ask questions like the following;
- Partnership puzzle. Are you married? How are their retirement savings doing? How closely linked are your financial futures?
- Legacy lifeline. Do you or your spouse plan to receive a pension? What role does that play in your income?
- The Social Security sandbox. How much do you expect to receive from Social Security? When do you plan to claim them? In early retirement scenarios, it is crucial to understand this timing.
- Debt dragon. How much debt do you have at the moment? If you carry significant debt into retirement, it will slow you down and drain your resources.
- Lifestyle ledger. What is your realistic budget for retirement? It’s not a guess; it requires a thorough understanding of your present and future expenses.
- Healthcare hurricane. Are you considering the ever-rising costs of healthcare, especially the gap before Medicare eligibility at 65? Do you have any plans to provide long-term care? Early retirement is a major piece of the puzzle.
- Big ticket tango. Do you anticipate any significant future expenses? Think about your dream vintage car, travel, home renovations, or supporting adult children. These factors can significantly impact your withdrawal rate.
If you are staring blankly at any of these questions, you are not yet ready to hang up your hat and head for the early retirement sunset. Well, not yet at least.
The Early Retirement Game Changer: Time and Healthcare
There’s no doubt about it: retiring early completely flips the script. It’s not just a matter of shaving off a few years at the end of your career; it’s the possibility of adding decades to your retirement timeline. As a result, your savings need to stretch much further.
Healthcare is a major barrier to early retirement. Until you reach 65, you will not be eligible for Medicare. That leaves you with a significant gap where you will have to pay for your own health insurance, and those costs can be substantial, to say the least. As such, this single factor can decimate an unprepared early retiree’s nest egg.
Furthermore, the longer your retirement horizon, the more vulnerable you are to life’s unpredictable events. The following are a few instances when seemingly bulletproof retirement plans have been derailed by unforeseen circumstances:
- Health scares. Even a sudden illness requiring expensive treatments can deplete even a healthy nest egg.
- A family crisis. It is not uncommon for unexpected family emergencies to require significant financial outlays.
- The underestimation trap. Early retirees often underestimate their spending. Your “frugal” lifestyle might quickly change into frequent travel, dinners out, and spontaneous purchases. Trust me, it happens. Those $30,000 kitchen renovations or that Disney trip with the grandkids can become reality—and blow the budget.
Your Pre-Retirement Power Move: Seek Expert Guidance Now
You don’t need to wait until you have crossed the finish line before you figure out how to make your early retirement a reality. Now would be a good time to seek professional financial guidance, while you still have the income and flexibility to adjust.
I’m not talking about just any financial advisor. In particular, you need a Certified Financial Planner™ (CFP®). Professionals like these are obligated to put their clients’ interests first, which means they are legally bound to do so. In addition to investment strategies, they also provide tax planning, healthcare planning, estate planning, and income management during retirement.
Also, it’s easier than you think to find a CFP® in your area. Head to cfp.net and use their “Find a CFP® Professional” tool. You can find potential advisors who can assist you during this critical phase by searching by location.
Decoding Your Ideal Retirement Planner
If you’re interviewing potential retirement planners, look for specific expertise;
- Retirement income maestro. You should choose an investment company that specializes in turning your accumulated savings into a predictable and stable income stream that will last throughout your retirement.
- Early retirement navigator. In addition, they should understand the unique challenges of early retirement, such as bridging the Medicare gap and delaying Social Security benefits.
- Withdrawal of wisdom. They should also be experts in withdrawal planning — knowing how much can be safely taken out and when, so the nest egg won’t run out prematurely.
Don’t be shy about interviewing multiple advisors, either. This is an important partnership. A good planner will ask insightful questions, listen more than they speak, and focus on your individual goals and aspirations, not just the size of your portfolio..
DIY Tools: A Starting Point, Not the Finish Line
For those who don’t yet need a full-service financial planner or simply want to crunch some numbers on their own, many helpful online tools are available. In many cases, I recommend Bankrate’s savings withdrawal calculator. Using this calculator, you can estimate how long your savings might last based on your savings balance, withdrawals, expected rate of return, and other factors.
Remember, however, that these calculators are a starting point, not a replacement for personalized financial planning. They provide a general idea but don’t account for inflation, taxes, market volatility, or the inevitable surprises of life.
The Bottom Line: Is $1.1 Million Your Early Retirement Launchpad?
So, back to the million-dollar question (pun intended): Is over a million dollars enough to retire early?
The honest answer is: It might be.
It is only possible if you have meticulously done your homework. Unless you’ve thoroughly considered healthcare costs, inflation, taxes, and the inevitable curveballs life will throw at you. This can only be achieved if you have a well-thought-out spending plan aligned with your desired lifestyle.
And ideally, only if you’ve partnered with a qualified financial planner to stress-test your assumptions and build a robust strategy.
I would like to give one piece of advice to all the aspiring early retirees out there: Don’t go it alone, and absolutely do not wait until you’ve left the workforce to figure this out.
You’ve worked tirelessly to build your wealth. So, let’s make sure your wealth works just as hard for you in your early retirement years, providing you with security and freedom. Now is the perfect time to think about your retirement plan and make sure your $1.1 million, or whatever your magic number is, truly sets you free.
FAQs
What is “early retirement”?
Early retirement typically refers to ceasing full-time employment before the traditional retirement age of 65-67. Depending on individual circumstances, it can occur between the late 40s and early 60s.
Why do people consider early retirement?
There are many reasons why people choose to retire early, including:
- The desire to spend more time with family, traveling, or engaging in personal pursuits.
- Career burnout or dissatisfaction.
- Having become financially independent.
- Wanting to pursue a passion project or a second career.
Is early retirement right for everyone?
Many factors go into deciding whether to retire early, such as financial situations, health, lifestyle preferences, and personal objectives. What works for one person may not work for another.
What are some key factors to consider before deciding on early retirement?
When considering leaving the workforce, many factors must be considered, including financial readiness (having enough income streams and savings), healthcare coverage, lifestyle expenses, inflation potential, and unexpected costs.
What is a “reality check” in the context of early retirement?
Reality checks involve assessing the potential challenges, financial implications, and lifestyle adjustments associated with retiring early. They involve going beyond the initial excitement and thinking about how to make it sustainable and fulfilling.
Image Credit: Tima Miroshnichenko; Pexels
