Can You Retire in Your 40s? Breaking Down the Risks, Rewards, and Real Numbers Behind Early Retirement

Retiring early might sound like the dream—especially if you’re stuck in a toxic workplace. But what does it really take to walk away in your 40s and not run out of money later in life? In this episode, Joe Anderson and Big Al explore two real-life case studies from people planning to retire in their 40s and lay out the long-term risks, realities, and recommendations.

Case Study 1: Peter and Joanna—Retiring with $3M at 45

Peter (age 45) and Joanna (44) are considering retiring in just two years. Peter is ready to walk away from a stressful office job, while Joanna plans to work until she’s 62. They currently spend $120,000 per year, and with Joanna’s projected income of $60,000, they’d face a $60,000 annual shortfall.

Here’s what they’re working with:

• $1.4 million in brokerage accounts
• $900,000 in Roth accounts
• $400,000 in traditional 401(k)s
• $100,000 in cash
• $700,000 home (fully paid off)
• $500,000 in a 529 plan for their kids (ages 6–10)

Future income includes Peter’s projected $3,600/month from Social Security at age 70 and Joanna’s $5,000/month pension starting at age 62. She’ll also get $3,000/month in Social Security at 70.

The math checks out—sort of. With a 2% withdrawal rate, they could likely cover their annual shortfall. But Joe and Big Al warn about the risks of retiring too soon. Sequence-of-return risk—where bad market years early in retirement permanently damage your portfolio—is a major concern. Add to that rising healthcare costs, inflation, and future tax changes, and even a $3 million nest egg starts to look vulnerable.

Case Study 2: A Single Listener With $2.25M and Burnout at 42

Next up: a 42-year-old listener in New Jersey wants to retire next year. Burned out from corporate life, he’s considering early retirement with the following portfolio:

• $1 million in a 401(k)
• $150,000 in a Roth IRA
• $400,000 in brokerage
• $700,000 in cash, CDs, and bonds
• $100,000/year in interest and dividends

He spends $50,000/year, including insurance. His plan is to draw down $700,000 in cash and bonds from age 43 to 51, then tap the brokerage account from 52 to 62. At 62, he expects $15,000/month from a pension and $14,000/month from Social Security. By then, he projects his 401(k) and Roth to grow to $2.2 million.

Sounds solid, right? Not so fast. Joe and Big Al raise red flags about relying too heavily on straight-line assumptions of 4% returns. If there’s a major downturn early on, his brokerage account could be depleted faster than expected. Plus, there’s a psychological toll to watching your accounts shrink—even if the math says you’re fine.

What Makes Early Retirement So Tricky?

Joe and Big Al break it down:

• Market volatility can gut your retirement plan if you don’t have cash buffers.
• Sequence-of-return risk is especially dangerous when you’re withdrawing early.
• Psychology matters—watching balances drop makes some retirees panic and sell.
• Tax changes and inflation can eat away at your portfolio faster than expected.
• Too much trust in calculators may lead to overconfidence in your projections.

The key is flexibility. That means having backup plans like part-time work, scaling back spending, or delaying large expenses until market conditions stabilize.

FIRE Isn’t as Simple as It Looks

The FIRE (Financial Independence, Retire Early) movement often glamorizes quitting your job in your 30s and coasting off investments. But Joe and Big Al caution that many FIRE retirees still earn income from side hustles, blogs, or content creation. That “retirement” may be more of a career pivot than a true break.

Even with millions saved, sustaining retirement for 40+ years takes discipline, adaptability, and often more income than expected.

Expert Advice for Early Retirement Planners

Here’s what Joe and Big Al recommend for anyone considering early retirement:

• Work part-time or find income-producing hobbies to reduce withdrawals.
• Diversify your portfolio to protect against market swings.
• Stress-test your plan against multiple scenarios—not just the optimistic ones.
• Avoid overconfidence in financial tools that assume perfect conditions.
• Have an exit plan from retirement in case you need or want to go back to work.

Final Thoughts

Both individuals profiled in this episode have done an incredible job building wealth. But early retirement is more than just hitting a number—it’s about building a sustainable lifestyle in the face of economic uncertainty. If you’re thinking about exiting the workforce early, make sure your plan isn’t just viable—it’s resilient.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

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• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

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• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.