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The good news is that a $2 million nest egg is not too shabby and can sustain you for the rest of your life as long as you don’t spend it irresponsibly.
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Gen X — people between the ages of 45 and 60 — have an average of $589,4000 saved in their 401(k)s as of the fourth quarter of 2024, according to a Fidelity Investments report. So by this account, you’re doing better than most if you have $2 million in retirement savings.
But is it enough for you to spend $150,000 a year? Probably not. The life expectancy of Americans is about 77 years, and you’ll want to plan for longer than that.
There are a number of factors to consider while making the math work for early retirement.
How much you can spend in retirement
The 4% rule is one of the most popular ways to figure out how much you can spend each year in retirement. It says if you withdraw 4% of your balanced portfolio (50% stocks, 50% bonds) in the first year, with subsequent amounts adjusted for inflation, your retirement savings should last you 30 years. But of course, there are no guarantees and some experts have warned retirees about this rule.
So if you have a $2 million retirement portfolio, you can withdraw $80,000 the first year. This is a little more than half the $150,000 you’re looking to spend a year. You would need a nest egg worth almost $4 million to safely withdraw $150,000 a year, per this rule. Your safe withdrawal rate would be even lower if you considered a longer retirement horizon, like 35 years or 40 years.
Talking to an expert can help you figure out exactly how much you can withdraw from your nest egg each year without worrying about your funds running out later.
You can match with a vetted financial advisor near you for free with Advisor.com.
Once you answer a few basic questions about your financial situation and goals, Advisor.com will comb through its database to find a FINRA/SEC-registered advisor best suited to help you.
Advisor.com’s network of financial experts are all fiduciaries, meaning they are required to act in your best interest. Plus, there’s no asset minimum to work with an expert on Advisor.com, not even a dollar.
Upon matching with an advisor, you can set up a free introductory consultation with no obligation to hire to see if they’re the right fit.
You also need to think about protecting your loved ones. Opting for term life insurance can help you secure your family’s financial future in the event the worst comes to pass.
Be mindful that life insurance premiums tend to rise as you age. Consider opting for a term life insurance with Ethos and lock in low premium rates now.
The process is simple and just takes 10 minutes, and you can get instant coverage for up to $3 million with premiums starting at just $2/day. You don’t need to undergo extensive medical exams or blood tests to get approved for life insurance with Ethos.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Pulling off your early retirement plans
If you decide to retire at 52, you need to be sure you plan out what expenses you will have. A general rule of thumb says you should expect to spend 80% of your pre-retirement income each year if you want to maintain your current lifestyle.
You also need to make sure your money is housed in the right types of accounts. When it comes to retirement accounts like IRAs and employer-sponsored ones like 401(k)s, you’ll face penalties if you make withdrawals before you reach 59 ½ years old. According to the IRS, you’ll need to pay an additional 10% in taxes on top of what you’ll need to pay on the amount you withdraw.
If you plan to retire early, consider having roughly 12 months’ worth of expenses in cash as a buffer in case of emergencies. This way, you don’t have to worry about the tax implications of withdrawing from your retirement accounts.
Where you keep this emergency fund is crucial. Choose a high-yield account so that your cash can continue to make money for you.
With SoFi, for example, you can open a fully digital checking and savings account while earning up to 3.80% APY. The best part? SoFi charges no account, monthly or overdraft fees.
You can get up to $300 when you sign up with SoFi and set up a direct deposit.
If you want to look at other options that earn you more than the national average interest rate, check out Moneywise’s list of best high-yield savings accounts of 2025.
Find ways to save
Retiring early also means that you need to make sure your nest egg can last much longer than if you retired later. See if there are ways to cut back or eliminate wishlist items like boats or a vacation property.. Fixed expenses like monthly insurance premiums might also take a big chunk of your budget.
Plus, with rising home and car insurance premiums, it might be challenging to account for the rising costs of insuring your assets on a fixed income. Between 2021 and 2024, homeowners’ insurance rates rose by 24%. On the other hand, car insurance premiums are expected to rise 60% faster in 2025 than last year due to the impact of tariffs.
Shopping around and comparing rates from different insurance providers can help you lower your monthly bill significantly.
OfficialCarInsurance.com lets you compare insurance rates and features offered by reputable providers near you for free. All you have to do is answer a few basic questions about your finances, driving history and the type of vehicle you want to insure.OfficialCarInsurance.com will then comb through its database of hundreds to help you find the lowest rate possible.
Get started for free and find rates as low as $29 per month.
You can also save an average of $482 per year by shopping around for home insurance quotes from leading providers near you through OfficialHomeInsurance.com.
The best part? The process is completely free, and you can find the lowest rates near you in just under two minutes.
What to read next
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
