A recent breakdown of retirement costs made the rounds showing just how much the "number" swings depending on where you live and when you stop working โ a lower cost-of-living state like North Dakota needs roughly $644,000 for a 65-year-old to retire comfortably, while New Jersey needs closer to $1.02 million. Retire earlier, and both numbers jump sharply higher.
That's not one big scary number โ it's three separate costs stacking on top of each other. Understanding each one separately is what actually makes a plan possible.
The Three Hidden Costs of Retiring Early
1. A Longer Retirement Needs a Lower Withdrawal Rate
The famous 4% rule assumes roughly a 30-year retirement starting around 65. Retire at 60 and your money may need to last 35+ years โ most planners suggest dropping to a 3.5% withdrawal rate, or 3.25% for retiring at 55. A lower withdrawal rate means the same spending requires a noticeably bigger portfolio.
2. Social Security Takes a Permanent Cut
Claim at 62 instead of your Full Retirement Age of 67, and your check is reduced by 30% โ for life. That's not a temporary dip; it's locked in permanently, which means your portfolio has to cover a bigger share of your annual spending every single year of retirement.
| Claim Age | % of Full Benefit |
|---|---|
| 62 | 70% |
| 65 | 86.67% |
| 67 (FRA) | 100% |
| 70 | 124% |
3. The Medicare Gap
Medicare doesn't start until 65. Retire at 60 and you need 5 years of private health coverage โ often $10,000-$15,000 a year โ that has to come from somewhere before your "regular" retirement spending even starts.
Illustrative: nest egg needed at $60,000/yr spending, New Jersey cost of living, by retirement age
Why Your State Matters So Much
Housing, taxes, and everyday costs vary enormously across the country. The same $60,000-a-year lifestyle can require a very different nest egg depending on where you retire:
Illustrative: nest egg needed to retire at 62 on $60,000/yr spending, by state
Putting It Together
None of these three costs is optional to plan for โ they all show up whether you account for them ahead of time or discover them after you've already retired. The advantage of separating them out is that each one is a lever you can actually pull: adjust your target retirement age, compare states, or budget separately for the Medicare gap years.
See Your Own Breakdown
Enter your state, spending, and Social Security estimate to see exactly how much each factor adds to your number.
Calculate My Early Retirement Number โ