Retire at 60 vs 65
the real cost

The setup
same person, two timelines

To make this comparison clean, we use the same person for both scenarios:

• Married couple, both age 55 in 2026
• $900,000 total savings — $600K in 401(k), $150K Roth, $100K taxable, $50K cash
• $20,000/year 401(k) contributions until retirement
• $70,000/year spending, inflation-adjusted at 3%
• Plan through age 95

The only variable: when they stop working. Everything else — savings, spending, growth rates, inflation — is identical.

We ran both scenarios through the Drawdown Arc projection engine with federal taxes enabled, married filing jointly, and 6% growth across investment accounts. Here's what we found.

What 5 more years
actually buys you

It's not just 5 years of salary. Those years affect contributions, compounding, withdrawals, and Social Security — all at once.

By age 65, the gap is $482,217. But it doesn't stop there — compounding keeps widening it every year. By 80 it's $1.57M. By 95, $3.67M.

Social Security
the hidden multiplier

Retiring at 60 usually means claiming Social Security at 62 — the earliest eligible age — which permanently reduces your benefit by roughly 30%. That's $21,000/year instead of $30,000/year.

Despite collecting for 5 fewer years, Scenario B receives $144,232 more in lifetime Social Security. The higher annual benefit more than compensates for starting later. Delaying to 70 would add even more — 8% per year of delayed credits.

The tax picture
a surprising reversal

Here's a result that surprises most people: the early retiree pays less in lifetime taxes. But that's not the win it sounds like. Follow the numbers from cause to effect:

Read it top to bottom: Scenario B's 401(k) balance at 75 is nearly double A's. That triggers Required Minimum Distributions more than twice as large, which push AGI into the 22% bracket (the 12% bracket tops out at $100,800 for married filing jointly in 2026). The result: $117,391 more in lifetime taxes.

But look at the bottom row. Scenario B pays $117K more in taxes and ends with $3.67 million more in assets. That's 3.2 cents in extra tax per extra dollar of wealth. The tax “penalty” is a rounding error on the wealth gap.

This is one reason Roth conversions during the low-income years between retirement and RMDs are so valuable — converting at 12% now to avoid 22% later.

The healthcare gap
60 to 65

Retiring at 60 means 5 years without employer healthcare and without Medicare. ACA marketplace premiums for a couple in their early 60s run $12,000–$20,000/year — that's $60,000–$100,000 before Medicare kicks in at 65. Our projections don't include this cost, so Scenario A's trajectory is actually worse than shown. For detailed planning, see our retire-at-60 guide.

ACA subsidies depend on MAGI, so your withdrawal strategy directly affects premiums. Roth withdrawals don't count toward MAGI, making them valuable during these pre-Medicare years. At 65, Medicare Part B starts at roughly $175/month per person (2026), though high income can trigger IRMAA surcharges.

When does the money
run out?

Neither scenario depletes by 95, but the margins are vastly different. Scenario A's withdrawal rate at retirement is 5.3% ($70K from $1.32M) — well above the 4% guideline. Scenario B's is 3.7% ($70K from $1.90M), comfortably safe. A bad sequence of returns could push A into depletion; B has room to absorb it.

The gap widens every year. For more on longevity risk, see how long will my savings last.

What if you split
the difference?

Retiring at 62 or 63 captures some of the benefits of both timelines. You get 7–8 years of contributions instead of 5, a few more years of compounding, and you can claim Social Security immediately at 62 without the income gap of retiring at 60.

Retiring at 62 is particularly notable because that's when Social Security eligibility begins. No more bridging the income gap with portfolio withdrawals alone. And retiring at 63 or 64 means you're just 1–2 years from Medicare — dramatically reducing the healthcare gap cost.

The tradeoff is always the same: each additional working year adds contributions, adds growth, avoids withdrawals, and potentially increases your Social Security benefit. Whether that tradeoff is worth it depends on your health, your job satisfaction, your savings level, and how much margin you want. There's no universally “right” answer — only the answer that fits your specific numbers.

The point of this comparison isn't to argue that 65 is better than 60. It's to show the actual magnitude of the decision in dollars — so you can make it with open eyes rather than a rough guess.

Run your own
numbers

The scenarios above use specific assumptions that may not match your situation. Your savings, spending, growth rates, Social Security benefit, and filing status all affect the outcome. The best way to see your personal retire-at-60-vs-65 comparison is to run both scenarios in the calculator with your actual numbers.

We've pre-loaded both scenarios with the assumptions from this guide. Click either button to open the calculator with those inputs — then adjust to match your situation.