Picture yourself retired, sipping your morning coffee on the deck of your lake house at the leisurely time of 9 a.m. Birds are chirping, a slight breeze is tickling your hair, and it’s a blissful 71 degrees. There is nowhere else you have to be.
Oh, and you’re only 50 years young, so you’ll have the energy later this afternoon to go for a run, take grandkids out on the boat, volunteer at an animal shelter, or even start a business of your own. The point is, your best years are far from over, and your time—life’s most precious commodity—is all yours.
A 2020 survey of 2,000 Americans over 40 found that people start feeling old at age 47.1 Working full-time generally contributes to the aches, pains, tiredness, and mental drain we feel as we get older—so it makes sense that the option to retire at 50 or sooner is a desirable goal for many.
Desirable, yes… but is it achievable?
The answer is yes, if you’re committed! Here are the steps we recommend if you’re asking, “Can I retire at 50?”
Retire at 50: Your Mindset
A plan to retire at 50 is not for the faint of heart.
First of all, you’ll need to practice delayed gratification like it’s your new life mantra. That will mean living on significantly less than you make (more on that later) and being content doing things that are cheap or free. You’ll need to re-train your brain to look for creative ways to cut back on everything, from entertainment to groceries and even housing. You’ll likely have to embrace a minimalistic lifestyle.
Next, you’ll need to be okay with aggressive investments. Depending on when you embark on this dream, you may need stocks with a high rate of return to reach your retirement number—which means taking on more risk than the average investor.
And finally, be mentally prepared to live and breathe good financial habits. That means:
- Staying focused on and educated about your money
- Not going into debt
- Keeping your ultimate vision top of mind
Because this lifestyle is so uncommon, you’ll probably need to be your own cheerleader. Family and friends won’t understand why you can’t take that lavish vacation or attend taco Tuesdays anymore.
Retire at 50: Know Your Number
People who are working toward F.I.R.E.—Financial Independence, Retire Early—use a standard rule of thumb. They assume that you will need 25 times your current income to retire. Of course, personal finance is just that—it’s personal. You should speak to an experienced, fiduciary financial advisor to figure out what your number should be.
Retire at 50: Save Aggressively
The truth is if you’re just out of college and wondering, “Can I retire at 50?” you should have started saving a decade ago. But don’t worry! You can start right now.
Let’s use an example: Chris is 28 years old and takes home an annual salary of $70,000. He doesn’t have anything saved for retirement yet. If he uses a F.I.R.E. rule of thumb and assumes he’ll need 25 times his current income to retire, he’ll need at least $1,750,000.
Chris uses a simple online retirement calculator to figure out that, assuming an average 8% rate of return, he can reach his goal by setting aside 45% of his income—starting immediately. Then he could retire at 50 with $1,881,569.
Following this formula, Chris would be investing $2,625 and living on roughly $3,208 per month.
But what if Chris waits until he’s 35 to start saving? Assuming the same average rate of return at 8%, Chris would only have $908,350 at 50. Those seven years cost him $973,219!
Or… what if Chris decides to start investing at 28, but he can’t sacrifice nearly half of his pay in his twenties? He wants to start investing 25%. This might surprise you, but he’ll actually wind up in a better spot by lowering the percentage he saves than if he punts investing for years: Investing 25% of his salary ($1,458 each month) for 22 years with an average rate of return at 8%, Chris would have $1,045,077 at 50 years old.
Retire at 50: Get Creative
Just because you have a set salary doesn’t mean that will be your only source of income. In our first example above, Chris may very well want or need to live on more than $3,208 per month.
We live in a side-hustle society. There has never been more opportunity to pick up gigs on top of your day job! Here are a few ideas to make extra money based on your interests and skillset:
- Get paid for taking online surveys
- Start a house cleaning or car detailing business for just a few clients per month
- Deliver food through apps like Uber Eats, GrubHub, or Postmates
- Become a virtual assistant
- Rent your extra bedrooms on Airbnb
- Start a photography business
- Do freelance proofreading or copy editing
Retire at 50 (or Sooner!): Can You Do It?
Many of our readers are probably thinking, “Gee, thanks. But I wish I had this idea twenty years ago!” We’re here to tell you: Don’t be discouraged. There are always options—whether it’s strategies to minimize the taxes you’ll pay in retirement, balancing your investment risks, or getting serious about saving—to help you retire sooner. Wherever you are in your financial journey, feel free to give our financial advisors a call to discuss your situation: 615-716-2061.
The biggest factor in retiring early or not is where you put your money. The Minimalists, Joshua Field Millburn and Ryan Nicodemus, suggest questioning all your purchases:
“It takes time to earn money, and my time is my freedom, so by giving up my money I’m giving up small pieces of my freedom. Before I make a purchase (even for a cup of coffee) I say to myself, ‘Is this cup of coffee worth $5 of my freedom?’ This has significantly changed my mindset.”
You see, whenever you say “yes” to something trivial, you’re saying “no” to something important. So, can you retire at 50? Or even sooner? The real answer is found in another question: How important is it to you?
* * *
Don’t leave the lifestyle you want in retirement up to chance! Fill out the form below to download our free Retirement Planning Checklist and make sure your income plan is on track: