Are you curious about early retirement? See how 401(k) balances compare for those in their 40s and 50s

For early retirees, these are not finish lines, but starting points. Conservative planning and saving above standards can mean the difference between running out of money and retiring with peace of mind.

Access your 401(k) before 59½

It’s important to know that you can’t access your 401(k) funds without a 10% penalty until 59½, except for limited exceptions.

This means that anyone who retires before 59½ will need a plan to cover expenses in order to access these funds. Taxable brokerage accounts, Roth IRA contributions (which can be withdrawn without penalty), or other sources of income are necessary to bridge the gap.

6 ways to boost your savings for early retirement

If you want to boost your retirement savings to retire early, there are several things you can do to be better prepared:

1. Estimate your early retirement number

Start by projecting your annual expenses, then multiply them by the number of years you expect your retirement to last. For early retirees, this might mean 40 to 50 years. Build inflation, health care, and a buffer for unexpected costs. Knowing the size of the gap makes it easier to target savings.

2. Max contributions, especially with catch-up

It doesn’t stop at the employer match, which is a big advantage. Gradually increase your 401(k) contributions in your 40s to the annual IRS limits if you can, then take full advantage of catch-up contributions once you reach age 50. If you’re serious about early retirement, aim to continually maximize your contributions, even if it means cutting back on lifestyle spending.

3. Build savings outside of retirement accounts

Because 401(k) withdrawals before 59½ are penalized, it’s essential to have money in taxable brokerage accounts, Roth IRA contributions, or elsewhere, such as a high-yield savings account, that can be tapped in advance. These accounts should fund the years until you reach 59½.

4. Review your investment mix

In your 40s, lean towards growth to build momentum; In your 50s, gradually shift to protecting what you’ve built. Diversification is even more important when your timeline is longer, because a market decline early in retirement (known as return sequence risk) can do lasting damage.

5. Consolidation of old accounts

If you change jobs, roll your old 401(k) into your current plan or IRA. Fewer accounts means fewer fees, less chance of losing track, and easier monitoring of your progress.

6. Health care plan

Health care is one of the largest costs of retirement, especially if you retire before Medicare eligibility at age 65. If your employer offers a health savings account (HSA) and you qualify, contribute as much as you can. HSAs have triple tax advantages and can double as a medical safety net in early retirement.

Bottom line

Early retirement is possible, but it requires more than just average savings. This means thinking carefully about how long your money should last, how it will cover health care, and how you will get through the years so you can access your 401(k) without a penalty.

Benchmarks and averages are a useful check, but if your goal is to get away from work early, you’ll need more discipline than the majority of your age group. The earlier you act with intention, the more flexibility and peace of mind you will have when you decide to step away from work.