Once you turn 59½, you’re eligible to take penalty-free withdrawals from an IRA or 401(k). However, many people still opt to hold off on retirement for a number of years beyond that point.

If you’re burned out at work or are just plain ready for that next stage of life, then you may be eager to retire at 60 — and with decent savings and minimal to no debt, that may be possible.

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As an example, let’s say you have a $750,000 nest egg by age 60. In this case, you’d actually be well ahead of the average American between the ages of 55 to 64.

According to the Federal Reserve, Americans in that demographic have a median retirement account balance of just $185,000, as of 2022.

Even the average savings balance among that age group, which is skewed higher due to a few really wealthy savers, is only about $538,000. So, $750,000 would put you in a great spot.

While you may be able to make a $750,000 nest egg work for an early retirement, in theory, there are some challenges you may encounter, so it’s important to go in with the right strategy.

The problem with retiring at 60

Retiring at age 60 poses a few challenges. First, you’re not old enough to collect Social Security.

The earliest age you can file for those benefits is 62 — and if you don’t wait until your full retirement age before tapping into it, you’re looking at a reduced monthly benefit.

If you’re 60 now, it means your full retirement age is 67, so you’re a ways off from being eligible for your complete monthly Social Security benefit.

There’s also healthcare to consider. Medicare eligibility starts at age 65. So, if you’re 60, you’ll need to pay for insurance, which could prove too costly.

In addition, extending your employer insurance under COBRA isn’t a great solution, either, since COBRA benefits tend to max out at 18 months. That won’t be enough to carry you to 65.

Finally, there’s the issue of running out of money in general. The longer the retirement, the more you risk depleting your nest egg in your lifetime.

Read more: Why people who work with a financial advisor retire with an extra $1.3 million

How to make an early retirement work for you

Despite the above challenges, retiring at 60 on $750,000 isn’t impossible. For one thing, if you’re mortgage-free and have no other outstanding debts, you may only have minimal monthly expenses.

If you intend to live modestly and stick to a budget, you may be able to make ends meet.

However, if you follow the 4% rule for managing your $750,000 nest egg, you’d be looking at pulling about $30,000 per year.

If you decide to delay claiming Social Security until your full retirement age, you may need a way to supplement your income until those benefits start coming in.

Even if you decide to file at age 62 for a reduced benefit (you’re looking at about a 30% cut by filing that early), you may still need extra income for a couple of years.

Working part-time could be a good solution in that respect, whether it’s a job with preset hours or side hustle with a flexible schedule. A T. Rowe Price report from earlier this year found that around 20% of current retirees are working in some capacity.

You may also be in a position to generate income after retiring by monetizing your home. This could mean allowing a tenant to rent out your finished basement or renting out a space in your driveway if you’re in an area where parking is hard to come by.

Finally, the way you invest your $750,000 will help determine how long that money lasts. You don’t want to take on excess risk where you’re at the point of tapping your nest egg, so consider limiting stock holdings to 50% of your portfolio.

However, you may want to focus on income-generating assets, like dividend stocks, real estate investment trusts (REITs), and bonds instead.

That said, make sure to keep at least one to two years’ worth of living costs in an emergency fund. This gives you access to money without having to risk taking a loss on investments.

Consider building some wiggle room into your annual budget for unexpected expenses. Over time, your home may need costly repairs, or health issues could leave you on the hook for higher-than-average medical bills.

So, while it’s smart to set an annual budget, leave yourself some flexibility to tackle larger costs, too.

You may want to sit down with a financial adviser before you take the leap into retirement at age 60. They can help you manage your budget and assets so you’re less likely to run into money problems as you sail into your golden years.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.