Is It Possible to Retire Early with $2 Million and a Six-Figure Pension?

RDDT

When some people talk about early retirement, they're referring to leaving the workforce in their 30s or 40s. While that’s possible, it comes with significant risk because your savings would need to last far longer than they would under a traditional retirement timeline.

Retiring in your mid-50s, however, is a very different scenario. You’re still several years away from collecting Social Security or qualifying for Medicare, but you’re only asking your nest egg to stretch for an extra decade rather than two or three. That reduces a great deal of longevity risk.

So when I came across this Reddit post, my initial reaction was that this person is likely in excellent shape to retire now.

Not only do they have a 401(k) valued at $2 million, but they also hold an additional $2.5 million in a brokerage account. And the real difference-maker is their pension — a substantial benefit that provides a reliable income stream regardless of market performance.

A pension changes the picture

Without a pension, I’d say this poster might be able to retire now, but there would still be a meaningful level of risk involved. A $4.5 million portfolio is an impressive achievement, but for someone retiring in their mid-50s, withdrawals would likely need to stay around 3 percent per year to preserve that balance. That works out to roughly $135,000 in annual income.

For many retirees, $135,000 would be more than enough. But people who accumulate several million dollars by their mid-50s are usually high earners, which means $135,000 may represent a significant drop in lifestyle.

This is where the pension changes the picture entirely. The poster is set to receive a $120,000 annual pension starting in 2026, and it includes cost-of-living adjustments that could increase it to $170,000 over time.

That completely shifts the retirement outlook, because the pension alone provides a strong income foundation. It reduces pressure on their savings and makes early retirement far more sustainable. Even if they withdrew only half of that $135,000 from their investments, they would still begin retirement with close to $200,000 in annual income.

It’s also worth noting how unusual pensions have become, especially in the private sector. For most people, the closest equivalent is Social Security, but even the maximum Social Security benefit falls far short of a $120,000 annual payout.

It's best to seek outside guidance

All things considered, this poster appears to be in a perfectly solid position to retire. They may face higher healthcare costs until Medicare begins, but based on their income sources and savings, that’s an expense they should be able to manage comfortably.

Still, early retirement is a major financial decision, and it’s wise to approach it carefully. This poster — and anyone in a similar situation — would benefit from consulting with a financial advisor. A professional can review their investments, spending needs, and long-term goals to help them make a confident, well-informed choice. And if they do decide to retire in their mid-50s, an advisor can also help structure their withdrawals and investment strategy so their money has the best chance of lasting throughout their retirement.

The New Report Shaking Up Retirement Plans 

You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. See even great investments can be a liability in retirement. The difference comes down to a simple: accumulation vs distribution. The difference is causing millions to rethink their plans.

The good news? After answering three quick questions many Americans are finding they can retire earlier than expected. If you’re thinking about retiring or know someone who is, take 5 minutes to learn more here.