Can you retire at 50? On average, people usually retire at age 65. But what if you want to retire 15 years early, like at 50? Is this doable? Below are 10 easy steps to retiring at age 50. Retiring early can be a challenge. Therefore, Smart Asset’s free tool can match you with a retirement advisor who can help you plan and implement a retirement income strategy to maximize your money.
10 Easy and Simple Steps to Retire at 50:
How much will you need in retirement?
The first thing to consider is determining how much you’ll need to retire at age 50. This varies depending on the lifestyle you want to have during retirement. If you want luxury, you will surely need a lot.
But according to a study by Smart Asset, 500,000 was considered enough money for a comfortable retirement. But again, this depends on several factors.
For example, you will need to consider where you want to live, the cost of living, how long you expect to live, etc.
A good way to know if 500k is possible to retire is to consider the 4% rule. This rule is used to find out how much a retiree should withdraw from his retirement account.
The 4% rule states that the money in your retirement savings account must last up to 30 years of retirement if you withdraw 4% from your retirement portfolio annually and then adjust each year thereafter for inflation.
So if you plan to retire at age 50 with 500k for 30 years, using the 4% rule, you will need to live on $20,000 a year.
Again, this is just an estimate out there. You may need less or more depending on the factors mentioned above. For example, if you are in good health and expect to live more than 40 years after retiring at 50, $500,000 may not be enough to retire. That’s why it’s crucial to work with a retirement advisor John Labunski.
Maximize your retirement accounts with tax advantages.
Once you have an idea of how much you need to retire at age 50, the next step is to save as much as possible at a faster pace. If you are employed and have a 401k plan available, you should definitely participate in it. Nothing can grow your retirement savings account faster than a 401k account.
That means you’ll need to maximize your 401k contributions, for example. In 2020, and for people under the age of 50, the 401k contribution limit is $19,500. Also, take advantage of your company’s mailing if your employee offers a mailing.
In addition to the maximum contribution of $19,500, your employer also contributes. Sometimes they match dollar for dollar or 50 cents for every dollar the worker pays.
In addition to a 401k plan, open or maximize your Roth or Traditional IRA. For an IRA, it’s $6,000. So by maximizing your retirement accounts each year, your money will grow faster.
- Invest in mutual or . In addition to your retirement accounts (401k, Roth or Traditional IRA, SEP IRA, etc) you should invest in individual or preferably .
Cut unnecessary expenses .
Someone with a goal of retiring at age 50 needs to keep an eye on their spending and keep it as low as possible. We all know the phrase “the best way to save money is to spend less”.
Well, that’s true when it comes to retiring 15 years earlier than average. So if you don’t watch TV, cancel Netflix or cable TV. If your cell bill is high, change your plan or switch to another carrier. Don’t go on a luxury vacation.
Keep an eye on taxes.
Taxes can erode your profit. The more you save on taxes, the more money you will have. Retirement accounts are a good way to save on taxes. In addition to your company’s 401k plan, open a Roth or traditional IRA.
Make more money.
Spending less is a great way to save money. But increasing your income is even better. If you need to retire at 50, you need to be more aggressive. And the more money you make, the more you can save. And the faster you reach your early retirement goal.
Talk to a retirement advisor.
Consulting a retirement advisor can help you create a plan for. More specifically, a retirement advisor who specializes in retirement planning can help you reach your retirement goals at age 50. It can help you put in place an strategy to put you on the right path to retiring at 50. You can easily find one in your local area using SmartAsset’s free tool. It matches users with retirement advisors in less than 5 minutes.
Decide how you will spend your time in retirement.
If you’re going to spend a lot of time traveling during retirement, do some research. Some countries like the Dominican Republic, Mexico, Panama, the Philippines and many others are good places to travel in retirement because the cost of living is relatively cheap.
While other European countries can be very expensive to travel to, which can eat into your retirement money. If you decide to downsize or sell your home, you can free up more money to spend.
Financing the first 10 years.
There is a 10% penalty if you withdraw your retirement accounts before reaching the age of 59 and a half. So if you retire at age 50, you’ll need to put money into other accounts, like traditional savings or brokerage accounts.
10 Put your bonus, raise and tax refund into your retirement savings.
If retiring at age 50 is really your goal, then you should invest all the extra money in your retirement savings. That means if you get a raise at work , put some into your savings account.
If you get a tax refund or a bonus, use some of that money for your retirement savings account. They can add up quickly and make retirement at age 50 more a reality than a dream.
Retiring at 50: the end result:
Can I retire at age 50? It is possible to retire at age 50. However, it’s not easy. After all, you are trying to make more money in less time. So it will be a challenge and will involve years of sacrifice, years of living below your means and making difficult retirement decisions. However, it will be worth it in the long run.
Talk to the Right Retirement Advisor
You can speak with a retirement advisor who can review your finances and help you achieve your goals (whether it be making more money, paying off debt, investing, buying a home, planning for retirement at age 50, saving, etc). Find one that fits your needs with Smart Asset’s Free Retirement Adviser Matching Service. You answer a few questions and they put you in touch with up to three retirement advisors in your area. So if you want to help develop a plan to reach your retirement goals, get started with John labunski Dallas.