How much do you really need to enjoy early retirement?

The answer is probably lower than you've been told. Though the average American is woefully underprepared for retirement, there's a sizable chunk that could retire from their jobs today and never look back.

Could you be one of them?

Money and calculator next to notebook page with "early retirement" written on it

Image source: Getty Images.

A bare minimum
Wes Moss, Chief Investment Strategist for Capital Investment Advisors and host of the Money Matters radio show recently conducted a survey on how much money happy retirees had in their accounts. He shares his findings in his book, You Can Retire Sooner Than You Think. With some people wondering if even $1 million isn't enough for retirement, what Moss found was a pleasant surprise.

Source: Wes Moss.

Once most retirees hit the $500,000 mark, increases in happiness plateaued. That's a much lower mark that you hear talked about today. Moss says that you should consider this a "bare minimum"  for retirement happiness.

So how many people does that mean could retire before Social Security's full benefits age of 66?

It's hard to say for sure, but the Insured Retirement Institute's (IRI) annual survey of the boomer generation offers a glimpse. According to IRI, 80% of baby boomers have saved for retirement. Of that chunk, about half of these boomers have over $250,000 saved. It's impossible to know how many of those folks have at least a half-million, but the figure is encouraging nonetheless. The youngest boomers are turning 50 right now, so there's still time for serious savings and growth within these accounts as well.

If you count yourself among these strident savers, you've passed the first step toward early retirement.

Early retirement on just $20,000?
Don't start jumping up and down quite yet. If you do the math, Moss' $500,000 number equates to about $20,000 per year in retirement.

That's because most financial planners say that you can safely withdraw 4% of your nest egg to make it last indefinitely. With savings of $500,000, that means pulling out $20,000 per year. For a lot of people, that simply doesn't seem like enough, which is probably why Moss calls it a "bare minimum."

Here are some of the key forms of income that can help supplement that number, which are often overlooked when planning for retirement:

  • Social Security: You can start taking Social Security at age 62. To find out how much you could get, visit the organization's website. The average American earning $50,000 per year can expect an additional $12,600 from Social Security if they retire at age 62, and up to $25,000 if they retire at age 70.
  • Defined benefit plans: Though pensions are largely unavailable to today's younger workers, there are still a number of boomers that have some defined benefit plan to fall back on. According to the Bureau of Labor Statistics, in 2011, 18% of private sector workers had access to pensions, while 78% of state and local government workers had such coverage.

Redefining what "early retirement" means
But you don't have to rely solely on a pension or Social Security to help you bridge the gap between $20,000 and what you'll need in retirement. There are other solutions, but they require you to tinker with your definition of "early retirement." 

For instance, instead of meaning, "a total stoppage of all paid labor," early retirement could mean dropping out of the 9-to-5 rat race, giving up the commute, and focusing on how you can get paid for working on your passions. 

Even if you can't get paid for your passions, part-time work can actually be a very healthy decision for early retirees. One of the biggest surprises retirees have is their sadness over the loss of social connections with work friends. Part-time work affords you the opportunity to stay active, healthy, and connected.

For those that have no pension and years to go until you can collect Social Security, it won't actually take that much to bridge your funding gap. If you and your wife can each find part-time jobs that pay $15,000 per year, you'd be bringing in $30,000. When you include the $20,000 withdrawal from your nest egg, your total comes to $50,000 per year. That's about the level of spending where Moss found happiness levels began to plateau.

In a practical sense, that means finding a job that pays $15 per hour that you work at for just 20 hours per week.

And the options don't stop there. There's always the possibility of buying a rental property to provide a solid stream of revenue. And if escaping the workforce is really important to you, it could be worth evaluating whether or not you and your spouse could go through a serious spending down-shift. If you've paid off your house in-full, living on $20,000 per year might be a lot easier  than you think.

But let's step back and take a reality check: saving $500,000 isn't easy -- but it also isn't impossible. Half of boomers are at least within spitting distance of the figure. There's no reason for outdated concepts of what "early retirement" means to hold you back from changing your life in ways that are going to make you happier. In the end, that's all that should really matter.