Can I retire at 60 with $1.25 million?

The short answer

$1.25 million at age 60 supports about $43,750 per year before tax, $3,646 a month, using a 3.5% withdrawal rate across a 35-year retirement through age 95. Set aside roughly $45,000 for healthcare before Medicare and the sustainable figure drops to $42,175.

Check it against your actual spending

The number above assumes average behaviour. Yours is the one that matters.

Annual spending you want in retirement

That is a 0.00% withdrawal rate on $1.25 million.

Reserve $45,000 for 5 years of pre-Medicare healthcare (about $9,000/year)

At 3.0% (conservative) $37,500/yr

At 3.5% $43,750/yr

At 4.0% (the "4% rule") $50,000/yr

Verdict

Workable

$42,175 a year of headroom.

Sustainable $42,175/yr

You want $0/yr

Portfolio needed $45K

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What actually decides it at 60

The withdrawal rate is the easy part. These are the constraints specific to retiring at this age.

You need 5 years of health coverage before Medicare

Medicare starts at 65. Retiring at 60 means covering yourself for 5 years first: through an ACA marketplace plan, COBRA or a spouse's employer plan. At roughly $9,000 per person per year, that's about $45,000 you should treat as spoken for. It is the single most underestimated line item in early retirement.

Planning an early exit

Social Security is 2 years away at the earliest

Benefits cannot start before 62, and claiming at 62 permanently reduces them by about 30% versus waiting until 67. For 2 years your portfolio carries the full load alone, which is exactly the stretch where a bad sequence of returns does the most damage.

Why the first years matter most

A 35-year retirement changes the math

Planning through 95 means this portfolio has to last 35 years. The 4% rule was built on 30-year horizons, so we use 3.5% here instead. That single adjustment is the difference between $50,000 and $43,750 of sustainable annual spending, and it is why generic 4% answers mislead people retiring early.

How the rate is derived

Common questions

Can you retire at 60 with $1.25 million?

$1.25 million at age 60 supports roughly $43,750 per year before tax, using a 3.5% withdrawal rate over a 35-year retirement. Whether that is enough depends on your actual spending, and on covering roughly $45,000 of healthcare before Medicare at 65.

How much can you withdraw per year from $1.25 million?

At a 3.5% rate, $1.25 million produces about $43,750 a year, or $3,646 a month. At a flat 4% it would be $50,000, and at a conservative 3% it would be $37,500. The rate matters more than most people expect over a 35-year horizon.

What order should you withdraw from at 60?

At 60 the 10% early-withdrawal penalty no longer applies, so the question becomes tax efficiency: generally taxable accounts first, then tax-deferred, then Roth, while watching for the bracket and IRMAA thresholds that a large traditional balance can push you into.

Assumptions on this page. Spending figures are pre-tax and in today's dollars, modelled through age 95 (35 years). The 3.5% rate is scaled to that horizon rather than fixed at 4%, because the 4% rule was derived from 30-year retirements. Social Security, pensions and other income are excluded, including them raises what this portfolio can support. Healthcare before Medicare is estimated at $9,000 per person per year. These are planning estimates, not advice; run your own numbers and read the model's limitations.

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