Retiring before 65 can be rewarding, but it introduces several planning considerations that are worth understanding before you commit to a date.

Health insurance is the most immediate. Medicare eligibility begins at age 65, so early retirees typically need to find coverage on their own, usually through the ACA marketplace. Premiums can be significant and vary based on your age, income, and location. One important detail: withdrawals from traditional IRAs and 401(k)s count as taxable income. If those withdrawals push your annual income above certain thresholds, the subsidies that help reduce your premiums can shrink or disappear - sometimes abruptly. Managing how much you withdraw each year, and from which accounts, can have a real impact on what you pay for health coverage.

Accessing retirement accounts early also comes with a cost. Withdrawals from tax-deferred accounts like traditional IRAs and 401(k)s before age 59½ are normally subject to a 10% early withdrawal penalty in addition to regular income taxes. Strategies such as Rule 72(t) (substantially equal periodic payments) and the Rule of 55 for workplace 401(k)s can help avoid this penalty in specific situations, but each comes with strict requirements. Research these carefully before counting on them.

Your Social Security benefit is calculated using your 35 highest earning years. Retiring early means fewer years of contributions, and any years with no earnings count as zeros in the calculation. This can noticeably reduce your eventual monthly benefit, especially if you stop working well before your full retirement age.

Finally, retiring at 55 rather than 65 means your portfolio may need to last 35 to 40 or more years. A longer time horizon increases exposure to sequence-of-returns risk - the risk that poor market performance early in retirement can permanently reduce your portfolio's ability to recover. This generally points toward more conservative spending assumptions and careful planning.

Every situation is different. A financial advisor or tax professional can help you evaluate these factors in the context of your own plan.