What It Really Takes to Retire at 55

When it comes to retirement, 55 appears to be a sweet spot. You've had time to work and save money, but you're still young enough to enjoy life outside the workplace. The reality is that wanting to retire at 55 and being ready to do so are two different things. That's not to say that it's impossible (because it's not); only that retiring at 55 requires a plan and some good old-fashioned stubbornness.

Image source: Getty Images.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »

Determine where you stand

Some say that your magic retirement number is 25 times what you expect to spend in a year after you retire, and others recommend saving 33 times the amount you expect to spend annually. Another common rule of thumb is to aim for 70% to 80% of your pre-retirement income.

However, you can't entirely count on someone else to tell you how much you'll need, because your situation is unique. You may have goals and aspirations that the average person doesn't, and if so, your needs are different.

Pinpoint your financial goals

To the best of your ability, put together a post-retirement budget consisting of housing costs, transportation expenses, travel, and leisure activities.

The more detailed you make that budget, the better. The more detailed your budget, the more likely you are to create a realistic target. While you can't anticipate everything that will come your way following retirement, you can make some pretty good guesses.

For example, you'll want to factor in an inflation rate of 2% to 3% annually and spend this time building an emergency account you can draw from when the market is in the dumps. And because you're planning to retire early, consider the cost of a healthcare plan that will cover you until you're 65 and old enough to claim Medicare, as well as the long-term cost of healthcare in retirement.

Make those goals a reality

It's not enough to have goals. You need a basic plan. For example:

• Look at your current budget: Track how much you're spending each month and identify expenses you can trim from the budget. Living below your means will not only increase the amount you can save and invest today but also make it easier to retire when the big day comes.
• Investment strategy: Develop a diversified investment portfolio that balances both growth and income. Stocks, bonds, real estate, commodities, and other assets can help you build a solid financial foundation.
• Withdrawal strategy: One of the most difficult things for retirees to do is to begin spending down the funds they've worked so long and hard to save. Now is a good time to begin thinking about how much you'll withdraw from your retirement account annually. While the 4% rule remains popular, other withdrawal strategies may work even better.

Aiming for an early retirement takes strategy and hard work. If you need help creating a detailed plan, a financial advisor can help. If you've never worked with a financial advisor, consider someone who charges an hourly rate, and specifically look for a fiduciary (an advisor who's legally bound to work in your best interests rather than their own).

The Motley Fool has a disclosure policy.