Thinking of Retiring Early? What Financial Advisors Discuss First

Retiring early can symbolize possibility and the ability to find meaning in your life without chasing income. But while it’s a dream many Americans share, it’s also a complex and difficult one to pull off.

As a result, people often bring up this goal to their financial advisor to work out a strategy to achieve early retirement from work. But what ensues tends to be a conversation that involves compromises and intricate planning, requiring disciplined saving and investing strategies that challenge typical lifestyle needs.

In this article, we’ll highlight how advisors respond to clients who express a desire to retire early, and how professionals develop plans centered around that milestone that also account for both financial and emotional readiness. To provide additional depth and real-world perspective, you’ll hear the unique insights of advisors with comprehensive financial and retirement planning experience.

Here are five talking points financial advisors go over with clients who want to retire early:

1. “Why Do You Want to Retire Early, and How Does It Look?”

Early retirement is as much an emotional goal as a financial one. While it involves a strong commitment to smart saving to accomplish, it also requires an understanding of your values, vision for the future, and what you’re willing to do to get there. All of this can be daunting to consider, and that’s why financial advisors often lead with why you want to retire early.

The reasons for leaving work sooner can vary significantly, ranging from:

• Burnout at work.
• Having more time to spend with family and friends.
• Prioritizing health.
• Goals to travel while you’re physically able.
• Exploring new purpose, activities, or hobbies.

Whatever the underlying cause, Stoy Hall, CFP^®, founder and CEO at Black Mammoth, observes that it almost always boils down to a desire for freedom and purpose. “A lot of people say they want to retire early, but what they actually want is freedom. Freedom from a toxic job, freedom to travel, freedom to not feel like a damn robot living the same day 10,000 times,” he says.

That’s why Hall prefers to “understand the emotional core of that decision” prior to “[diving] into spreadsheets or portfolio projections.” He adds, “[Retiring] early just to sit on the couch bored or stressed about money isn’t the goal. It’s not about stopping work—it’s about redesigning life on your terms.”

Ultimately, the reasoning for retiring early will lead to the next point, which is what it will look like for you. Advisory professionals will want to know how you approach a retired lifestyle so they can reverse engineer how to help you create that reality. Consider factors such as how you envision your life, a target age range, and what you want to achieve.

“I typically like to know what their idea of retirement looks like and at what age they would like to retire,” says Michael Rodriguez, CFP^®, founder and lead planner at Equanimity Wealth. “Retirement can be great for many, but if you do not have an idea of how you will spend your time it can lead to people having a lack of purpose,” he adds.

2. “This Will Require More Disciplined Saving, and Sooner”

Planning to retire ahead of schedule requires a focused financial strategy, often combining elements like increased, disciplined saving and investing. Because your time horizon will likely be longer than that of on-schedule retirees, you’ll need to have substantial savings to account for this extended period.

As part of a saving strategy, your professional may recommend allocating funds across vehicles such as:

• High-yield savings accounts (HYSAs) for building an emergency fund and earning compound interest.
• Roth IRAs or Traditional IRAs for long-term tax-advantaged growth through investing and compound interest.
• Workplace retirement plans (e.g., 401(k), 457(b), 403(b), etc.) allow tax-advantaged growth, higher contribution limits than IRAs, and potential employer matches.
• Taxable brokerage accounts function as a flexible and accessible place to save and invest, especially before you can access retirement accounts at 59.5 years old.

To arrive at your early retirement target, you’ll likely have to augment your savings rate while minimizing expenses. This takes a serious commitment and changes to your lifestyle choices, possibly meaning living below your means and making difficult decisions to reduce spending. These tradeoffs will almost undoubtedly be something your advisor will relay.

“One of the biggest sacrifices is having to save aggressively,” explains Doug Roller, founder at Crossroads Financial Group. “If you’re thinking of retiring early, you must commit to saving a substantial portion of your income, often ranging from 50% to 75% of your after-tax paycheck. This may require you to reduce your discretionary spending, have a strategic budget plan, and live very frugally so you can save more money.”

While striving to retire early, you’ll have to consider the longer time horizon and potential savings gap before you can tap into tax-advantaged vehicles. Mostly, this means ensuring you’re saving in accessible locations until you’re eligible to withdraw from your retirement income sources.

3. “Let’s Discuss Your Spending, Now and Later”

Attaining and sustaining early retirement demands making some choices regarding your spending. This will be a pivotal subject that you and your financial planner will work through together, especially for once you cross the retirement threshold.

Advisors often remind clients that retirement doesn’t always equal a simpler lifestyle or less spending. Sometimes, it can mean just as much or even more.

Hall notes that costs such as travel, medical emergencies, home repairs, or even inflation can eat into your savings each month and year. As he puts it, it can be easy to forget that “retirement isn’t less expensive” than your working years but “just different expensive.”

As you and your professional build a plan for before and after retirement, they’ll work with you to understand how to factor spending into your cash flow strategy, so it doesn’t dwindle what you’ve built. This might mean creating a budget and income plan to manage costs and stay on track.

“When one is considering retirement, I make sure they understand that they will be increasing their dependence on their assets,” says Aaron Brask, Ph.D., principal at Aaron Brask Capital. “They must be comfortable with transitioning from paychecks to chiseling money away from their portfolio.”

4. “What’s The Plan for Healthcare?”

One of the biggest challenges when retiring early is healthcare. Since you’re leaving work, you’ll need to have a plan that accounts for where coverage will come from, whether you’re paying out-of-pocket, using COBRA, ACA plans, etc. Unfortunately, this can be easily overlooked and quickly become stressful if you’re not prepared.

Unlike retiring at the conventional age of around 62 to 65, early retirees face a longer gap before qualifying for Medicare, which is typically available for those 65 and older. In that way, it’s now on you to handle costs on your own.

“People often underestimate the medical costs they will incur if they retire early,” says Rodriguez. “Many people experience sticker shock in early retirement when they realize how much of their healthcare costs their employer used to cover. Without that subsidy, monthly premiums can feel like taking on a second mortgage.”

So, how can you prepare? The first step is recognizing that you need a plan. Your advisor can help you explore options and assess how they fit into your retirement budget and timeline.

“We help clients explore options such as COBRA, Affordable Care Act (ACA) marketplace plans, and short-term health insurance,” says Roller. “Each option has advantages and disadvantages related to cost, the scope of coverage, and eligibility requirements.”

5. “Plan for the Emotionally and Financially Unexpected”

Your expert will likely review ways you can add safeguards against multiple scenarios that could impact your plan. Market volatility, emergency needs, or changing goals can put your retirement objectives to the test. For this reason, your financial advisor should help you manage risk and understand that the unexpected could always occur.

Hall shares that he reviews factors such as monthly cash flow, client income plans, liquidity needs, and how to handle the timing of withdrawals and minimize sequence-of-returns risk if one is retiring into a period of volatility. “I don’t sugarcoat it. If your plan doesn’t work under market pressure, inflation shocks, or medical surprises—then it doesn’t work. We don’t plan for best-case. We plan for real life,” he emphasizes.

Even with a detailed plan that accounts for risk, prepping for early retirement can require more than numbers. According to Dr. Constance Craig-Mason, MRFC^®, NSSA^®, CEO of Concierge Financial Advisory, many people assume that having “enough money” is the end goal, but that’s just part of the equation.

It’s critical to understand that “financial readiness doesn’t always mean emotional or lifestyle readiness,” she says. “I’ve worked with high-achievers who built significant nest eggs but were still financially vulnerable because they underestimated rising costs, overestimated investment returns, or failed to plan for how their identities would shift without their careers.”

A strong financial plan that accounts for both your emotional and financial readiness to approach early retirement is vital. Your advisory professional can help you tackle this from both angles, whether it’s asking you simply what you want out of retirement or helping you build an emergency fund while saving for long-term goals.

Bottom Line

Early retirement is a complex and varied goal that may not look the same for everyone. It presents several unique challenges that are important to plan for and manage. Therefore, financial advisors can serve as a crucial resource, working closely with you to develop a strategy that aligns with your vision, while accounting for proper income planning, spending, and healthcare expenses, among other aspects.

To begin discussing retirement with a professional, we recommend using this free matching tool to find a vetted financial advisor. After answering a few questions about your goals and circumstances, you’ll be able to connect with a reputable fiduciary expert who suits your needs.