How to Retire at 60

As lifetime pensions fall out of favor and the Social Security program remains the topic of hot debate, Americans are relying more and more on personal savings to fund retirement. The problem with early retirement is that for each year you retire early, you have one less year to save and one more year to live on your savings. For this reason, a comfortable early retirement requires careful advance planning.

Saving Money

Unless you have a pension or a passive income, or are satisfied to live on Social Security benefits, you are going to have to save to retire at 60 comfortably. If you retire at 60, Social Security benefits won't even kick in for several more years. Jack VanDerhei, Senior Research Fellow at the Employee Benefit Research Institute, recommends saving 690 percent of your annual pre-retirement income in a 401k account if you're male, and 720 percent if you're female. This will allow you to live on 80 percent of your pre-retirement income, including Social Security. If you're making $150,000 per year, that means more than a million dollars.

Expenses

Your expenses are likely to change after you retire. If the inflation rate exceeds what your retirement investments are making, you may end up with less and less to spend the longer you live. Since healthcare expenses are likely to rise, it is wise to make sure your health insurance fully covers you -- Medicare won't cover everything. If you're not working, you're gong to have a lot of leisure time on your hands, which may mean that your travel expenses increase. Finally, consider your lifespan. While most people hope for a long life, the longer you live the more money you're going to need for retirement.

Debt

A lot of money in your retirement account will do you only so much good if you carry a large amount of debt into your retirement. This is especially true if much of your debt is subject to variable interest rates. Find a balance between saving for retirement an paying off your debts, so that you can retire as close to debt-free as possible.

Non-Traditional Retirement

It might be useful to think of retirement not so much in terms of not having to work, but in terms of being able to afford to work for enjoyment rather than for money. This mindset will allow you to continue to work part-time in a low-stress, relatively low-paying job even after retirement -- or even turn a hobby into a job. Alternatively, you might consider retiring abroad. Some countries combine a low cost of living with incentives designed specifically to attract expatriate retirees. Costa Rica, for example, does not tax retirement income.

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