SPK makes a good point above. People who think they're retiring at 55 don't anticipate what it'll cost for healthcare from 55 to 65, social security kicking in (reduced benefit at 62, full retirement at 67 or "bonus" at 71) and how they will draw income in retirement. To Hall85's point, you don't need more income in retirement than when working, though you might be looking at certain outsized expenditures if you have goals of buying a vacation home, certain budget for travel, etc. Remember, if you're saving 13% during your working years, then that's 13% off the top that you don't need in retirement.
The thought of retiring at 55 made a lot more sense when life expectancy was in the 70s. Today, life expectancy (per insurance actuarial tables) for a healthy person could be in the 90s. Retiring at 55 might sound nice, but you cannot touch your qualified funds unless you're following Rule 72T for drawing retirement income early without penalty - otherwise you have to wait to 59 1/2. But even then, there are things you should consider, especially if you have time on your side.
In your 20s/30s - save, save, save (and then save more) - oh, and invest. Open an investment account and a Roth IRA, set a monthly contribution and forget they are there. Buy low cost, high face value term insurance to protect your loved ones, begin funding cash accumulating permanent life insurance while it is very cost effective (also, great tax deferred savings tool that can supplement retirement income, one of the last great tax loopholes). Buy disability insurance while cost effective to protect against extended periods out of work (1-in-4 people will experience a disability event in their lifetime. A 30 year old professional can get $5k tax-free monthly benefit to age 67 for about $3k a year.
In your 40s - begin considering retirement income/asset protection. Long term care, generally better as a hybrid policy. Can use a product based on variable universal life for market exposure and opportunity to build great care leverage (less need to have assets later in life to keep you out of a Medicaid facility). Oh, and save, save, save and invest. People generally don't think about some of these things life long term care until they go through it with a loved one who doesn't have the protection. DO YOUR WILL.
In your 50s - start asking the retirement questions, and how you will meet income needs. Want to retire at 55? If you put together a nice investment portfolio, an annuity in your early 50s could provide lifetime income (think pension) starting earlier. And if non-qualified (i.e. non-retirement) it won't be penalized at 55 if you draw income. Side benefit? When the money runs out, the income does not (if living benefit). If you annuitize, the asset is gone but the income is for life. Didn't think about long term care insurance before, start thinking now before it becomes cost prohibitive (though not impossible).
To me, retirement at 55 doesn't seem all it's cracked up to be, but "semi-retirement" and working on your terms does. Even working limited hours and coming close to breakeven with living expenses is prudent, as that puts off the need to draw on savings. The longer you can delay, the more time to grow.
Whatever you do, have a plan. Talk to a financial advisor. Make sure your financial advisor is a fiduciary. A licensed professional only has an obligation to recommend a suitable product. A fiduciary is obligated to work in your best interest at all times. Ridiculous that there is a distinction. Check your person on brokercheck.org, FINRA's website. They should have both a 7 and a 66 (or 63 and 65). If they are only a "broker" and not an "investment advisor", technically they cannot call themselves a financial advisor though they may. You can also see if they have any disclosures. Disclosures in themselves are not terrible, but only if they are dismissed or found to have no basis. If they are settled, someone formally complained and they were paid out.
Make sure you work with an independent (not only because I am... but). If someone works for a wire house (e.g. Merrill Lynch) or an insurance shop, they have an obligation to sell certain product. Don't buy life insurance from your P&C guy (home/auto), products will be severely limited and they are not a fiduciary. Don't walk into Northwestern Mutual or NY Life or MassMutual and expect anything but an overpriced, whole-life solution. An independent financial advisor will sell you universal life and term, most likely multiple policies (term, permanent protection based and permanent cash accumulating) that will deconstruct a whole life policy and provide a more cost effective, better investment/protection solution. DO YOUR HOMEWORK.
Oh, and a fiduciary will help you do your homework. And if not an asshole, will help educate and advise with the goal of building a relationship, not jamming a product down your gullet. If you build the relationship, the sales will come.
