What does retiring three years early cost? Calculated, in two parts

Retiring three years early costs roughly €131,000 at €40,000 of annual spending.

That figure consists of two parts: €111,004 to bridge three years of spending, and €20,002 because your pension is permanently lower. If you receive a payment under the early-exit scheme, that covers roughly half, leaving around €62,000 to fund yourself.

Below is where those figures come from, and what changes if your situation differs.

Where the costs come from

The calculation assumes someone stopping at sixty-four rather than sixty-seven, spending €40,000 a year, reaching state pension age at 67, and accruing €12,000 of occupational pension across forty years.

Component 1: bridging three years of spending

Between your stop date and your state pension date nothing arrives. You pay for those years yourself.

You don't need three times €40,000, because money you haven't spent keeps earning. What you need is the present value:

€40,000 × 2.7751 = €111,004

That 2.7751 is the three-year annuity factor at 4% real. Three years of spending therefore costs the equivalent of nearly 2.8 years' worth.

Component 2: a permanently lower pension

This component is almost always forgotten, and it's real money.

Stop three years early and you accrue three years less pension. At forty accrual years producing €12,000 a year, each missed year costs you €300 a year of pension. Three years: €900 a year less, for the rest of your life.

To close that gap permanently you need €22,500 at your state pension date. Discounted back to your stop date, three years earlier:

€20,002

Together: €111,004 + €20,002 = €131,006.

What if you qualify for the early-exit scheme?

Since 1 January 2026 the Dutch early-exit arrangement is a permanent scheme, but exclusively for employees doing heavy work who demonstrably cannot continue healthily to state pension age. If you qualify, your employer can pay you for up to three years at €2,357 gross a month: net roughly equal to a net state pension.

Converted to wealth, such a payment across three years is worth roughly €69,000.

The scheme therefore covers roughly 53% of the cost. That's substantial, and it's less than most people assume.

The reason a gap remains: the payment sits at state-pension level, which for most people is below their actual spending. And it compensates nothing for the three years of pension accrual you miss.

If you don't fall under your sector's heavy-work definition, this route is closed and the full amount is yours.

What if you draw your pension early instead?

An alternative is starting your pension three years earlier. You then need no wealth for the bridge, but your payment is permanently lower.

The mechanism: the same pot must last three years longer. For someone with roughly nineteen years of life expectancy at sixty-seven, that becomes twenty-two. That alone reduces your payment by about 11%, or roughly 3.7% per year of early drawdown.

On top of that you accrue three years less. The two effects together make the difference considerably larger than that 11%.

What it is in your case is calculated by your pension provider. That's the only reliable source: differences between schemes are too large for a rule of thumb. Ask for a calculation before deciding anything.

Note too: drawing early covers your spending from your stop date, but your state pension still doesn't begin until your state pension date. Your income in those three years is therefore lower than what follows.

What it costs at other spending levels

Your spending level determines almost everything. The same three years, different amounts:

At €25,000 of spending with an early-exit payment, €20,308 remains. That's within reach of a savings account for many people.

At €60,000 it's nearly six times as much, while the scheme pays exactly the same. The payment is a fixed amount; your spending isn't.

One, two, five or ten years early

For the same person at €40,000 of spending:

Each additional year is slightly cheaper than the last, because it sits further in the future and your wealth has longer to grow towards it.

Important: from four years onwards the early-exit scheme disappears entirely. It reaches thirty-six months at most. Anyone stopping five or ten years early funds the whole amount themselves.

What isn't in this calculation

Three things working in your favour that aren't included here.

Your spending falls when you stop working. Commuting, office clothing, convenience meals on busy days, perhaps a second car. For many people that's several thousand a year. Use your expected spending after stopping, not your current figure.

Your mortgage may be repaid. If that monthly payment disappears during the years in question, your spending drops sharply, and since your required wealth is a multiple of your spending, that carries through hard.

Accumulated leave counts. Anyone who saved leave for years can bridge part of the period without touching their wealth.

And one thing working the other way: wealth above an exemption is taxed annually. That reduces your net return and should be reflected in the real percentage you calculate with.

The three mistakes

Counting only the bridge. At three years the missed accrual is worth €20,002: fifteen percent of the total. At ten years it exceeds fifty thousand.

Assuming the scheme covers everything. It covers about half at average spending, and less the more you spend.

Using your current spending. It changes when you stop, usually downwards. That works in your favour, but only if you include it.

How to run this for your own situation is in the article on your FIRE number, and which pot pays for your bridge years in the article on the three pension pillars.

How Gylder fits in

This calculation has two inputs, and both are harder to establish than the arithmetic itself.

What do you actually spend? Not your monthly budget, but your annual figure including everything irregular. Gylder categorises your transactions automatically, with a model running entirely on its own servers, and excludes transfers between your own accounts, so the figure means something.

What do you have now? Spread across bank, broker, exchange and your property. Gylder totals it into one continuously updated amount.

With those two the bridge calculator works out your figure and your date, saves them as a wealth target, and shows whether you're on schedule.

Your accrued pension can't go in, that's on mijnpensioenoverzicht.nl and doesn't belong here as wealth anyway, but as the future income stream that lowers the amount you need.

What this doesn't tell you

Pension accrual is simplified. The calculation spreads your expected pension evenly across forty years. In reality most schemes don't accrue linearly, and under some the later years weigh more. Your provider gives the exact figure.

Schemes differ considerably. Whether the early-exit route is open to you depends on the heavy-work definition in your collective agreement, which varies by sector.

Amounts are adjusted annually. The threshold is reset each year and the charge above it rises until 2028. Check current figures.

This isn't advice. What's sensible in your situation depends on your scheme, your health and your wealth. For a decision, your provider's calculations are what count.

Frequently asked questions

What does retiring three years early cost? At €40,000 of annual spending, roughly €131,000: €111,004 for the bridge and €20,002 for the permanently lower pension. With an early-exit payment, roughly €62,000 remains.

Is there a penalty for retiring early? Not for you as an employee. Your employer does pay a charge if they give you more than the threshold amount or if you stop more than three years early. That explains why employers rarely exceed it.

How much less pension will I get? Two effects stack: fewer accrual years, plus an actuarial reduction because the same pot must last longer. The second alone is roughly 11% at three years. Your provider calculates it exactly.

Can anyone use the early-exit scheme? No. Since 2026 it's reserved for employees doing heavy work, defined per collective agreement and validated by a national expertise centre.

What if I want to stop five years early? The scheme disappears entirely: it reaches three years at most. The cost is then €208,895 at €40,000 of spending, fully self-funded.