Early Retirement Feasibility: $1 Million Nest Egg, Pension, and Social Security at Age 62

A dual-income household with no outstanding debt is evaluating the viability of retiring at age 62, relying on a $1 million investment portfolio, a defined-benefit pension, and anticipated Social Security payments. The couple’s combined retirement income includes a $4,200 monthly pension and $3,800 in Social Security benefits at full retirement age, projected to begin at 67. This creates a base annual income of $91,200 from non-investment sources. The $1 million portfolio is expected to generate a 4% annual withdrawal rate, equating to $40,000 per year, which would bring total annual retirement income to $131,200. This figure exceeds the average U.S. household retirement expenditure of $57,000 annually, according to federal data, suggesting a comfortable initial spending capacity. However, the sustainability of this plan hinges on the portfolio’s long-term performance, inflation, and a 30-year retirement horizon. With the couple projected to live into their late 80s or beyond, the longevity risk remains significant. Historical market returns suggest a 70% probability of portfolio survival over 30 years with a 4% withdrawal rate, but rising inflation and market volatility could erode purchasing power. The absence of debt removes financial friction, but the need for asset growth to offset inflation becomes critical, particularly in the first decade post-retirement. Investors in similar situations are advised to consider a phased retirement strategy, delaying Social Security until age 70 to increase benefits by up to 24%, or adjusting withdrawal rates based on market conditions. Asset allocation, tax efficiency, and healthcare cost planning are also pivotal factors in long-term sustainability.