Thinking about retiring early? The idea can be tempting, but before making any decisions, you’ll want to carefully consider your financial situation.
It is possible to retire early at age 55, but most people are not eligible for Social Security retirement benefits until they're 62, and typically people must wait until age 59 ½ to make penalty-free withdrawals from 401(k)s or other retirement accounts.
For most people in 1960 or later, full retirement age — the age at which they’re entitled to 100% of their Social Security retirement benefits — is 67 in the United States.
People with 401(k)s at work may be able to withdraw money early from those accounts penalty-free — if they leave their jobs in or after the year they turn 55 (this is often called the "rule of 55").
NerdWallet Wealth Partners created a free calculator to estimate your financial independence number, see where you stand, and find out how much you might need to close the gap.
Can I collect Social Security and other retirement benefits at age 55?
If you retire at age 55, you probably won’t be eligible to receive Social Security retirement benefits for several years or be able to withdraw money from your retirement accounts without paying a 10% early withdrawal penalty. Additionally, for most people, Medicare won’t kick in for another 10 years.
Account | Age | Event |
401(k) and IRA catch-up contributions | 50. | May qualify to contribute more money than the annual limit to eligible plans. |
Roth IRA | 59 1/2. | Qualified withdrawals of earnings are tax- and penalty-free if the account has been open at least five years. (Contributions can be withdrawn at any time.) |
Traditional IRA, 401(k), 403(b), SEP IRA and SIMPLE IRA | 59 1/2. | Withdrawals are generally no longer subject to an early withdrawal penalty but are taxed as income. |
Medicare | Seven-month period surrounding your 65th birthday. | Enroll for Medicare Part B to avoid a penalty of a permanent monthly premium increase for delayed enrollment; there are exceptions that allow a delayed enrollment. |
Although you can begin receiving Social Security benefits at age 62, the Social Security Administration reduces your check by as much as 30% for life if you start taking benefits before you reach full retirement age. However, you’ll receive 100% of your benefit if you elect to wait until full retirement age, and your benefit grows through delayed retirement credits until age 70. The right claiming age depends on your health, other income sources and whether a spouse relies on your benefit. Claiming earlier means smaller checks for a longer period; waiting means larger checks but fewer years of collecting them.
One other thing to note is that benefits are based on your highest 35 years of indexed earnings, so how much you pay in Social Security tax (typically through payroll taxes withheld from your paychecks) affects the size of your Social Security retirement benefits. Accordingly, leaving the workforce early, or before you have at least 35 years of earnings, could affect the size of your eventual Social Security retirement benefit.
Your actual benefit may be lower or higher than estimate made with this calculator, because it does not take into account your actual earnings history.
We assume you have earnings every year until you begin receiving Social Security benefits. If you had several years of noncovered employment or your earnings changed significantly from year to year, this calculator will overestimate or underestimate your benefit.
This is your estimated benefit
if you begin taking Social Security at age 62
This is your estimated benefit
if you begin taking Social Security at age 67
Estimated benefits from age 62 to 70
Social Security break-even age
Your break-even point is the age at which the cumulative amount you may receive if you file later equals the cumulative amount you may receive if you file early. It signifies the point at which it may "pay off" to wait.
Age 75.2 is the age at which the total number of dollars you receive if you retire at age 67 exceeds the total number of dollars you'll receive if you retire at 62.
About these results
We estimated and then indexed your past earnings by using your current annual salary, the national average wage indexing series and the Social Security Administration's annual wage base.
We assume that people age 18 to 22 are less likely to have full-time earnings.
Future earnings are based on correct annual salary and expected annual salary increase.
With the exception of the indexing factor applied to past earnings, the calculations do not include an inflation rate. The results are presented in today's dollars.
How can I bridge an income gap if I retire at 55?
Although retiring early at age 55 doesn’t automatically make you eligible for Social Security or most government benefits for retirees, there are a few exceptions and strategies to know that could help you bridge an income gap.
Exceptions to 401(k) early withdrawal rules
In most cases, you’ll be subject to a 10% early withdrawal penalty if you take money from your 401(k) before you’re 59 ½. But according to the IRS, some circumstances may allow you to skip the penalty. Here are some examples:
You quit your job in or after the year you turned 55.
You’re totally and permanently disabled.
You agree to take “a series of substantially equal periodic payments over your life expectancy.”
You had tax-deductible medical expenses that exceeded 7.5% of your adjusted gross income.
You were a reservist called to active duty for at least 180 days after Sept. 11, 2001.
Birth or adoption of a child (check your employer's plan on this one).
You quit your job as a federal or state government public safety employee when or after you turned 50.
Exceptions to IRA early withdrawal rules
Generally, money taken out of an IRA before age 59 ½ is subject to a 10% early withdrawal penalty unless one of these exceptions applies:
You become totally and permanently disabled.
You have qualified higher education expenses.
You agree to take “a series of substantially equal periodic payments over your life expectancy.”
You are a first-time home buyer (for lifetime withdrawals up to $10,000).
You had tax-deductible medical expenses that exceeded 7.5% of your adjusted gross income.
You were a reservist called to at least 180 days of active duty.
Pension plans
Depending on where you’ve worked, you may be able to take withdrawals from a pension on or before you turn 55. Check with your employer to see if you’re eligible. Teachers in California, for example, might be able to retire at age 55 if they have at least five years of service credit. Members of the U.S. military, meanwhile, typically can retire at any age after 20 years of service.
Nonretirement accounts
Although most types of retirement accounts limit how much you can contribute in a year, there are usually no limits to how much you can invest in high-yield savings accounts, stocks, bonds, mutual funds, exchange-traded funds or other investment vehicles. In particular, bonds, bond funds, dividend stocks and dividend funds might provide monthly income regardless of your age (that income isn't guaranteed, however). Interest and dividends are generally taxable. High-yield savings accounts are typically FDIC-insured up to applicable limits and may carry less risk, but their rates can change.
HELOCs
Do you own a home? If so, a home equity line of credit, or HELOC, may be an option. These loans let you borrow against the equity in your home without needing to sell or refinance your home. The fees for a HELOC vary, and you must repay the loan. Also, your home is collateral, so you could risk foreclosure if you can't repay. HELOCs often have variable interest rates, so your payments may increase later. Lenders may also freeze or reduce your credit line, too.
NerdWallet Wealth Partners created a free calculator to estimate your financial independence number, see where you stand, and find out how much you might need to close the gap.
Article sources
- 1.SSA.gov. Starting Your Retirement Benefits Early. Accessed Oct 14, 2026.
- 2.SSA.gov. Delayed Retirement Credits. Accessed Oct 14, 2026.
- 3.SSA.gov. Social Security Benefit Amounts. Accessed Oct 14, 2026.
- 4.IRS.gov. Topic No. 558, Additional Tax on Early Distributions From Retirement Plans Other Than IRAs. Accessed Oct 14, 2026.
- 5.IRS.gov. Retirement Topics - Exceptions to Tax on Early Distributions. Accessed Oct 14, 2026.
- 6.California State Teachers' Retirement System. Retirement benefits. Accessed Oct 14, 2026.
- 7.U.S. General Services Administration. Military and veteran retirement benefits. Accessed Oct 14, 2026.
