I am 59 years old, have $700,000 in savings and am tired of work. If I quit my job and retire now, how long will my money last?

To retire early or not to retire early? It’s a common conundrum for many Americans as they approach retirement age.

But before you retire, it’s crucial to make sure your money does too last through your golden years – and you may need more than you originally thought.

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In reality, research from GoBanking Rates found that a $1 million savings would only last roughly fifteen years in some of the more expensive states, such as Hawaii and New York.

According to Northwestern Mutual’s Planning & Progress 2024 studythe average American needs $1.46 million to retire comfortably – a whopping 53% increase from 2020.

Suppose you are 59 years old, have $700,000 in savings and are considering early retirement, even though it is a healthy choice. nest eggyou would still be well under the $1.46 million threshold.

So before you take the plunge, consider the pros, cons, and long-term financial implications.

What you should pay attention to before you retire early

When evaluating whether your money will last if you choose early retirement, it’s important to realize that there are many additional costs to consider when making the decision.

For starters, the earliest you can claim Social Security is age 62, so you’ll have to get by only your savings for a few years.

However, if you Doing If you decide to start claiming Social Security at age 62 – years before your full retirement age of 67 (if you were born after 1959) – you can expect a 30% cut in your monthly benefits.

Reducing your Social security benefits means you’ll have to rely more on savings later.

You should also consider the cost of health insurance, which you may not qualify for Medicare up to 65 years.

COBRA This allows you to remain on your employer’s insurance plan for 18 months after retirement, but once you retire you will be stuck with all the premiums.

When COBRA runs out, you’ll have to buy individual coverage, which can be expensive and not as comprehensive.

There is also the simple problem of running out of money in general. The longer you spend in retirement, the more you risk depleting your savings.

Read more: The average cost of health insurance has risen to $8,435 per year, but just a few minutes can be too help you find affordable coverage

How to make early retirement work for you

If you’re ready to retire, or if your health is affecting your employment experiences, you might be a lot happier if you retire. However, that happiness won’t last if you’re broke in your eighties.

The best way to find out if your early retirement plan is even feasible is to see how much money you can withdraw from your accounts and see if you can live on it.

For example, if you are mortgage-free and have no outstanding debts, you may have only minimal expenses, making retirement with $700,000 in savings more likely.

However, if you have the 4% rule for managing your savings, you can earn about $28,000 annually.

Some experts even suggest being more conservative than the 4% rule, given the current state of the economy and the fact that people are living longer.

Therefore, it may be worth considering working part-time to bring in some extra income. According to one report from T. Rowe Price: 20% of current retirees are working in some capacity, including side hustle.

If you don’t have one emergency fund Consider setting aside some money in your annual budget to cover unexpected expenses, like a medical emergency or a leaky roof. This will help you avoid having to dip into savings or investments in your golden years.

Finally, you may want to sit down with one financial advisor to help you determine whether or not early retirement could be right for you and your lifestyle.

If you think you can stick to a strict budget and earn $28,000 a year for the foreseeable future, you may be able to move forward with leaving the workforce early.

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This article provides information only and should not be construed as advice. It comes without any form of warranty.