Ask an Advisor: I Have $760K, a Rental Property, and Disability Benefits. Is Retiring at 55 too Early?

Loraine Montanye, CFP®

Mon, Mar 10, 2025, 7:36 AM 8 min read

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I’m a 43-year-old woman with a partner (not legally married) and no kids. I currently have $500,000 in a 401(k) and contribute up to the pre-tax limit every year, plus $10,000 in non-deductible contributions. I have $50,000 in an IRA and bonds, $100,000 in stocks and $100,000 in savings. I own a rental property that currently has $550,000 in equity and makes $15,000 profit annually, which will be paid off before I turn 55. The house I live in is owned with a mortgage and has $200,000 in equity. I receive a VA disability pension of $2,000 per month tax-free.

When I turn 60, I will also receive a retirement pension of $2,000 per month. Both of those have COLA adjustments annually. I plan on purchasing a second rental property soon. I expect my expenses in retirement to be around $100,000 per year. With my VA disability, I also have free healthcare coverage. I’d like to know if I will be able to retire at 55 without needing a part-time job.

– Stephanie

First, congratulations on diversifying your assets and income streams. It’s clear that you consistently made purposeful choices with your money. By maintaining a long-term financial mindset, you now have some personal wealth to show for it. Determining whether you can potentially afford to retire at 55 requires what’s known as a gap analysis.

A financial advisor can help you build a comprehensive retirement plan. Connect with a fiduciary advisor today.

Many Americans will not have the same breadth of retirement income available to them as you do when they retire and will have to rely more heavily on savings withdrawals to cover their expenses. While the results may be different, gap analysis will help these individuals plan for retirement, as well.

Have you ever asked an online search engine how much money you need to retire, only to find staggering lump sums in the search results? These numbers aren’t helpful because they don’t frame retirement in terms of income needed over a long period. Gap analysis in retirement income planning is a more useful approach because it answers the question: What are my expenses and income, and is there an income shortfall or “gap” that I need to cover with savings?

Here’s the basic equation: Expenses – Reliable Income Sources = Gap

Of course, many variables come into play in real life such as inflation and taxes, and the actual calculations are more complex. Furthermore, if we were building a financial plan for you, we’d ask follow-up questions about the information you provided, gather documents to verify the fine print of your benefits and learn about your specific objectives. My firm would deliver a multiple-scenario plan to you that can show you yearly projections of your expenses, your income, and your assets. (And if you want to work with a financial advisor, this tool can help you connect with fiduciaries who serve your area.)