• Roth Conversion Series: Part 1 and Part 2
• The Benefits of Claiming Social Security Early
• Americans Say They Need $1.46 Million to Retire
• Retirees Cut Spending by 1.5% Every Year

If you want to retire early, I’m going to explain exactly how to do it. Because the truth is, if you don’t think it’s possible, it’s likely because you’re approaching it (or thinking about it) the wrong way.

So, today, I’m going to break it all down.

First, I’m going to share why you should ignore retirement savings benchmarks and why delaying Social Security isn’t always the right answer.

Then, I’m going to walk you through a simple 4-step process for building your personalized early retirement plan.

By the end, you’ll see how retiring as early as 62 might be the smartest decision for you, your family, and your health.

The Retirement Myth That Keeps People Working Too Long

You’ve probably been told at some point that you need at least $1 million saved, or ten times your salary, or that you must follow the sacred “4% rule” to retire safely.

But here’s the truth that long-time listeners are very aware of: these one-size-fits-all formulas rarely apply neatly to individual situations.

They completely ignore the realities of YOUR life.

They overlook the option of taking Social Security at 62.

And they dismiss the idea of retirement spending naturally decreasing as you age.

Perhaps worst of all, these popular retirement formulas ignore lifestyle flexibility. In other words, they ignore your ability to adjust discretionary spending, pick up part-time work, relocate, or downsize your home.

According to a recent Northwestern Mutual survey, Americans believe they need $1.5 million to retire comfortably, which is 15% higher than the $1.3 million reported last year.

Even crazier, it’s nearly 60% higher than the $950,000 Americans said they needed in the 2020 study.

People’s ‘magic number’ to retire comfortably has exploded to an all-time high.

However, many successful retirees (even those living desirable lifestyles!) thrive on much less than some might assume.

As you may be able to relate to, these widespread retirement myths and rigid planning benchmarks can create unnecessary stress, causing many people to feel “behind” and continue working longer than needed.

But being behind isn’t about failing to reach some arbitrary savings target—it’s about not having a plan tailored specifically to YOUR retirement needs.

The truth is, you might be much closer to retirement than these myths suggest. So, let’s dismantle these common misunderstandings and uncover what genuinely makes retiring at 62 feasible for you.

The Key Factors That Make Early Retirement Possible

To start, successful early retirement heavily relies on optimizing guaranteed income sources like Social Security.

Many financial planners (myself included) often recommend delaying Social Security for as long as possible.

Delaying Social Security maximizes your monthly benefit and keeps you in a lower tax bracket for longer, allowing for a longer runway to implement Roth conversions.

Side note, if you want to learn more about Roth Conversions and how to evaluate them, I did an in-depth two-part series here on the show. You can scroll through the episodes in your app or visit youstaywealthy.com/147 to listen to part 1.

So, delaying Social Security until age 70 has clear benefits and is generally sound advice, but that doesn’t mean it’s the right move for everyone.

We don’t have the 2024 data yet, but in 2023, nearly 3 out of every 10 retirees claimed Social Security early at age 62, accepting a 30% reduction in income compared to waiting until full retirement age.

Are they all making a mistake? Are they all clueless about the benefits of delaying Social Security?

Absolutely not.

In fact, a brand new Vanguard study that I’m still digesting and reviewing closely found that for certain retirees, claiming Social Security early actually preserves MORE wealth over time compared to waiting until 70.

Why?

Because it reduces portfolio withdrawals and creates a financial buffer. In other words, taking Social Security early reduces the amount you need from your investments to fund retirement expenses, and it mitigates the need to sell investments at a loss during market crashes just to pay your bills in those early, vulnerable years of retirement.

You have a guaranteed income flowing in, helping your portfolio recover quicker.

It’s also worth mentioning the behavioral aspect, which is that people often place a higher value on $1 today versus a dollar tomorrow.

While this mindset doesn’t necessarily always align with maximizing wealth and isn’t the “textbook answer,” it’s widespread and relatable.

It can also be beneficial to some retirees because having immediate access to Social Security payments early on in retirement doesn’t just provide financial comfort, it also delivers significant psychological value and emotional reassurance.

Retirement isn’t just a numbers game—it’s about quality of life. Knowing there’s a steady stream of guaranteed income can reduce stress and anxiety, and give retirees the freedom to actually enjoy their golden years rather than constantly worry about market fluctuations or running out of money.

You see, claiming social security early isn’t always about accepting less; sometimes it’s about gaining strategic financial flexibility. You don’t necessarily need millions of dollars to retire confidently at 62, you just need a smarter, more flexible plan.

The Strategy That Turns “Behind” Into “Ready”

So, what’s the secret to this smarter plan?

Stop obsessing over building a bigger nest egg and start maximizing what you already have.

Said another way, approach the math from a different angle and reverse-engineer your plan.

Instead of asking, “How much do I need to retire” or “How much more do I need to save?” ask, “How much do I actually need to spend to fund my lifestyle?”

For example, I recently spoke to a couple who felt significantly behind with $1.8 million saved.

Every online calculator told them they needed $2.5 million. They were stressed and working jobs they hated, sacrificing their health for a number that wasn’t even accurate.

Here’s what we discovered: They needed $130,000 per year to fund their retirement—housing, travel, entertainment, everything.

Like many people I talk to, they weren’t even considering social security before age 70, because everything they read told them that taking it early is the wrong choice. That everyone should delay to get the higher benefit.

But knowledge is power, and exploring what it looks like to take it early and knowing how that decision can help or hurt your plan, is a wildly beneficial exercise. Even if you don’t take it early, knowing you CAN and knowing the impacts of that decision changes your mindset.

For this couple, taking it early was likely the right answer based on their unique retirement needs and goals. So, when we factored in Social Security at 62, which would pay them a combined $50,000 annually on day one of retirement, we highlighted that they would now only need $80,000 from their $1.8 million portfolio.

Now, under the problematic and overly conservative 4% rule, they would mistakenly assume retirement was still out of reach.

4% x $1.8 million is only $72,000 per year.

However, by shifting and improving their portfolio asset allocation and implementing a flexible withdrawal strategy known as Guardrails, we highlighted that they could safely begin taking out $97,000 per year from their portfolio—more than what they actually needed.

Even better, we revisited their expenses and highlighted that a healthy percentage of them, such as travel, would naturally decrease as they aged, offering further flexibility in their later retirement years.

So, after strategically aligning their Social Security claiming strategy and portfolio withdrawals with their unique situation and goals, they realized that retirement at 62 with a $1.8 million nest egg was not just possible, it was comfortably achievable.

Sure, delaying retirement might lead to more wealth, but it often means sacrificing valuable years of health and enjoyment.

On the other hand, voluntary (keyword there)…voluntary early retirement with a well-crafted plan can deliver significant health benefits, reduced stress, and dramatically improved quality of life.

And these benefits frequently outweigh the incremental financial gains of working longer.

Now, understanding the strategy is one thing, but implementing it properly and with confidence is where the real success comes from.

To help provide you with a starting point in your planning or your retirement conversations with your spouse or trusted advisors, let me walk you through a simple 4-step process for building your personalized early retirement plan.

How to Build Your Early Retirement Plan

Step 1: Get Brutally Honest About Your Expenses

You’ll want to document your essential expenses first—these are the must-haves: Housing, utilities, food, transportation, insurance (especially health insurance before Medicare). These are your non-negotiables.

Then, identify your fun money, these are your discretionary expenses: travel, entertainment, spoiling the grandkids, that golf membership you’ve always wanted. If you want to add me as your plus one to your new golf membership, even better.

But separating these two expense types and understanding this breakdown creates clarity for accurate planning at the start of this exercise.

Step 2: Match Guaranteed Income to Essential Expenses

Here’s where you can use claiming Social Security at 62 as your planning anchor.

Once again, even if you’re not convinced you will claim it early, knowing you CAN, and knowing the impacts of that decision (positive or negative) can significantly shift your mindset and improve retirement confidence.

You’ll also include pensions or other guaranteed income, and then compare these guaranteed income sources to the essential expenses you documented in Step 1.

If your essentials are $75,000 and Social Security at 62 gives you $30,000, your true annual gap that you need to fill from your investment portfolio is $45,000.

Step 3: Build Flexibility Into Your Plan

Remember, retiring earlier with less money than you assumed you needed requires a smarter, more flexible plan.

We need our plan to bend, but not break.

For example, you’ll certainly need to factor in inflation, but remember, average retiree spending typically decreases over time.

In fact, The Center for Retirement Research at Boston College found that the average retired household cuts its spending by about 1.5% every year throughout retirement.

Yes, medical expenses or a long-term care event can offset that decrease, but costly medical events that make sizeable dents in retirement budgets are rarer than most people assume. Still, you’ll need to factor in your own health and anticipated needs to determine how to best factor in current medical expenses and future potential expenses.

As part of step 3, you’ll also want to factor in what I call your “flexibility levers.”

Could you work 10 hours a week doing something you enjoy? Or downsize housing if needed? Or opt for a more affordable staycation instead of an overseas trip when the markets aren’t cooperating?

These aren’t requirements—they are valuable options that can reduce risk and enhance retirement confidence.

Step 4: Optimize Withdrawal Strategies to Reduce Taxes and Improve Your Plan

As part of adopting a flexible withdrawal strategy like guardrails, you’ll need to determine an appropriate order of operations for withdrawing money from different types of accounts with different tax treatments.

While this can be a complex decision that changes month to month, year to year, in short, you’ll typically want to start by filling favorable tax brackets first with pre-tax IRA withdrawals or Roth conversions.

Then, from there, consider using taxable investment accounts to fill additional income gaps, taking advantage of the more favorable long-term capital gains rates.

Finally, allow those Roth IRAs to grow and compound tax-free for as long as possible, maximizing their long-term potential, allowing for tax-free withdrawals later in retirement or tax-free inheritance for your heirs.

Bottom Line

The concepts discussed today aren’t theory—I’ve seen them work over and over.

And the pattern is always the same: People feel “behind” because they’re measuring themselves against generic benchmarks or their friends or family instead of their actual needs.

And here’s the problem specifically for those who want to stop working and want to retire: every month you delay could be costing you precious time with family, your health, and experiences you’ll never get back.

You might be thinking, “But what if I run out of money?”

That’s a valid and common concern that certainly needs to be addressed and built into your long-term plan, but working 5 or 10 more years in a job you don’t love just to stash more money away because you “feel behind” isn’t always the right answer—especially if you’re too tired or unhealthy to enjoy it all when you finally do pull the trigger.

As I noted in a recent episode, the biggest retirement risk for smart, diligent savers like you isn’t necessarily running out of money, it’s running out of time.

By documenting your expenses, thoughtfully leveraging Social Security benefits, identifying your flexibility levers, and implementing a flexible tax-efficient withdrawal strategy, you likely already possess everything needed to retire much sooner than you believed possible—and that decision could genuinely be one of the best financial and personal decisions you ever make.

Once again, to view the research and articles referenced in today’s episode, just head over to youstaywealthy.com/245.