How to Retire at 55

By starting early and planning carefully, you can retire at 55 and begin a new chapter in life.

Many active adult communities require homeowners to be above 55, giving way to the assumption that the majority of homeowners in such communities are retired. Many people would like to retire by 55 and have more time to travel, learn new things, and spend time with friends and family; however, according to MSN, the average retirement age is 64.

Today, a 55-year old American will not technically reach full retirement age (where they can collect their full Social Security Benefits) until they’re 67 years old. But this doesn’t mean that retiring at 55 is an unreachable dream. Here’s how you can do it.

Start Planning Early

Many people who decide they want to retire early start thinking about that when they turn 50, which is generally too late to make it a reality. According to CNBC, most Americans don’t even have enough money in their retirement accounts at age 50 to retire comfortably at age 67, much less at age 55.

To retire at 55, you need enough money saved to last you many more years of your life, which means planning how to save that money and how to spend it wisely.

Determine How Much Money You Need

Two big questions for those who want to retire are: “how much money will I need in retirement?” and “where will that income come from?” The honest answers to those questions are unique to each individual, where they live, and what type of lifestyle they want to have in retirement.

The average life expectancy in the U.S. is about 79 years. However, life expectancy is also dependent upon each individual. Financial planners would suggest that with retirement planning, people should go beyond the average expected and include money for higher health care costs as we age. So, retiring at 55 could mean saving enough for 35 more years of income.

Business Insider estimates that if someone wants an income of $100,000 a year in retirement, they would need $3.45 million in a taxable investment account. A $65,000 a year income shrinks that account to $2.2 million. CNN Money recommends a simpler formula of 30 to 35 times a normal annual income. Regardless of someone’s income at retirement, other important factors to consider include housing costs, the costs of travel and other fun things planned for retirement, and health care costs.

Learn How Policies Will Impact Your Retirement

One big consideration for those who want to retire early is not where their income will come from, but where their health care will come from. In the United States, health care is traditionally tied to employment. Americans can’t get on Medicare until age 65, which would leave a 55-year-old retiree ten years without coverage.

Today, options include buying health care on the health care exchanges set up under the Affordable Healthcare Act or paying for COBRA (Continuation of Health Coverage). However, these options can be an unexpected cost. AARP found that adults aged 50 to 74 who buy their own health insurance can spend over $8,000 a year in out-of-pocket expenses in addition to premiums.

Another policy that may impact income is when a retirement account will allow you to withdraw funds. Many Americans have retirement accounts in the form of 401(k)s or IRAs, which stipulate that withdrawing money before the account holder is 59-and-a-half years old will incur a penalty. Those who want to retire at 55 will have to have about five years of income that doesn’t come from retirement accounts or Social Security.

Diversify Your Investments

One way to cover that five-year gap is by diversifying investments. While retirement accounts may stipulate the age when someone can withdraw money, other types of investments do not.

For example, a simple savings account can always be accessed. Retirement accounts are made up of stocks, but additional stock and bond purchases can benefit a diverse portfolio and be sold at any time for income. Other experts recommend annuities, which provide a consistent income stream over a period of time.

Find Other Income Streams

While working a nine-to-five job is usually the most common form of income, retiring from that job can offer the opportunity for other types of income. For some, this could mean downsizing to a home that’s smaller, less expensive, or in a place with a lower cost of living. Retiring at 55 can also give people the opportunity to invest in real estate and gain income through rentals. Finally, retiring can provide an opportunity to work part-time at a more enjoyable job, such as a museum tour guide, a freelance writer, or something else equally fun.

Can you spot the $207,744 difference between these identical homes?

Financing is the difference!

Get the details in The 62+ Loan Homebuyers Guide.

55places Mortgage is a joint venture between Mutual of Omaha Mortgage and
Details here.

We're here to help! (800) 928-2055

Call us to speak with a customer service representative.

Subscribe to Our Newsletter

Get Weekly Updates

I agree that 55places and its affiliates, partner providers or agents may call, text, or email me about my inquiry, which may be made with automated means. I understand that my consent is not a prerequisite for buying a property. I may revoke my consent at any time by contacting Message/data rates may apply. I also agree to’s Privacy Policy and Terms of Use.

The Best Places to Snowbird in 2021

We’ve gathered 25 of the best places for snowbirds, including cities in Florida, Arizona, California, Texas, South Carolina, and Nevada. For each entry, we’ve also provided a list of recommended 55+ communities in the area. If you’re ready to find your own winter retreat this season, here are some of the best places to consider.

Retired woman enjoys swimming in her active adult community.

Your Guide To Exploring Types of Active Adult Communities

If you’re considering downsizing and upgrading to a more carefree lifestyle, you may be surprised to find how many types of active adult communities there are. Explore the right active adult communities for you with our guide.

A boat pier at sunrise in Lake Placid, Florida.

Lake Placid Living: A Look at 55+ Communities in This Central Florida Gem

8 minute read Located in the heart of Central Florida, Lake Placid offers the best qualities of small-town America. Surrounded by scenic lakes, nature preserves, and cultural attractions, the “Town of Murals” is perfect for active adults. With two 55+ communities in Lake Placid—Covered Bridge and Tomoka Heights—the area’s affordability makes it an appealing option

Relaxed 55+ adults camping with friends and drinking a cup of coffee while enjoying retirement.

How to Choose the Right Retirement Community for You

Choosing the right retirement community is an important decision. There are questions you should ask yourself when considering an active adult community. These are some of the most important questions to ask yourself when choosing the retirement community for you, as well as some active adult communities to consider.

Mature couple plays tennis, enjoying an active adult lifestyle.

How Can I Be Sure the Active Adult Lifestyle Is Right for Me?

As you approach retirement, it’s natural for your lifestyle needs to change. That lively neighborhood with young families may have been perfect in the past. However, now you might prefer something different. What does an active adult lifestyle involve?

About 55places

We’re changing the way people 55 and older are searching for their perfect next place. With a national network of hand-selected real estate experts, plus comprehensive information, unbiased content, and on-the-go insight about thousands of communities across the country, we’re a trusted resource paving the way from here to home. Whether you’re interested in a low-maintenance single-level residence, an active lifestyle or age-qualified community, an intimate enclave, or anything in between, we can help you make your next move the best one yet.

Scroll to Top