Early retirement sounds like a dream—but it requires careful planning to avoid pitfalls that can derail your future. Whether you’re aiming to retire in your 50s or even earlier, it’s not just about having enough savings. It’s about knowing what challenges lie ahead and structuring your finances to handle them. At MB Wealth Advisors, we help North Carolina professionals turn early retirement goals into reality—with fewer surprises and more confidence.
Healthcare Coverage Before Medicare
One of the biggest gaps early retirees face is health insurance. Medicare doesn’t kick in until age 65, which means if you retire at 55, you could be paying for private coverage for a full decade. Costs can run $1,000+ per month for a couple, depending on the plan and subsidies available.
We help clients explore options like:
- COBRA continuation coverage from a former employer
- ACA marketplace plans with potential tax subsidies
- Health Savings Accounts (HSAs) to fund future expenses tax-free
Withdrawing Without Penalties
Retirement accounts like traditional IRAs and 401(k)s typically impose a 10% penalty for withdrawals before age 59½. That penalty can eat into your savings unless you plan ahead.
Strategies to avoid penalties include:
- Substantially Equal Periodic Payments (SEPP): Rule 72(t) distributions allow for early penalty-free withdrawals
- Roth contributions: You can withdraw your contributions (not earnings) anytime, tax- and penalty-free
- Taxable accounts: Use brokerage or savings to bridge the gap until penalty-free age
We create phased withdrawal strategies that protect your assets and minimize tax exposure across decades—not just in your first year of retirement.
How Long Will Your Money Need to Last?
Retiring at 55 could mean funding 35–40 years of living expenses. Longevity risk—the risk of outliving your money—is one of the top concerns for early retirees. That’s why your investment strategy must balance growth with protection.
At MB Wealth Advisors, we run retirement simulations using conservative life expectancy assumptions to test different income and market scenarios. This helps us adjust your plan for inflation, health costs, and market downturns.
Social Security Timing
You can claim Social Security as early as age 62, but doing so means a permanent reduction in your monthly benefit. Delaying benefits until age 70 increases your payout significantly—but only makes sense if you have other income sources in the meantime.
We factor Social Security into your early retirement plan and often recommend using taxable or Roth assets to delay benefits for a stronger long-term income stream. Learn more on our retirement planning services page.
How Taxes Could Surprise You
Retiring early doesn’t mean escaping taxes. In fact, your tax bracket might change dramatically depending on income sources, investment decisions, and RMDs in later years.
We help you avoid tax landmines through:
- Strategic Roth conversions in low-income years
- Tax-smart withdrawal sequencing from various accounts
- Harvesting capital gains at 0% if applicable
Should You Downsize or Relocate?
Many early retirees consider moving—either to reduce living costs or to match their new lifestyle. But moving too early or without a plan can backfire financially. We run budget comparisons for staying vs. relocating, factoring in property taxes, healthcare access, and proximity to family.
North Carolina has become a popular destination for early retirees. If you’re moving to the area, check out our blog on financial steps before and after a move.
The “Gray Zone” Between Retirement and Full Rest
Many early retirees don’t stop working completely. Some consult, start businesses, or take part-time roles. This can provide financial breathing room and a sense of purpose—but it can also affect taxes and benefits.
We help clients design “work optional” lifestyles that blend flexibility with financial freedom.
Let’s Build an Early Retirement Plan That Works
Retiring early requires more than just ambition. It takes a clear understanding of income, risks, and tax rules over multiple decades. MB Wealth Advisors can help you avoid common mistakes and design a flexible, long-term strategy tailored to your goals.
Ready to take the next step? Schedule your early retirement consultation or call (704) 584-9363 today.
