The traditional retirement age of 65 doesn’t give you too much time to enjoy your post-work life when you take the average life expectancy of around 78 years into account. Between potentially only getting a little over a decade to enjoy your retirement years and only getting your chance to do so at an age where you may not be able to enjoy the same quality of life as you could’ve at a younger age, there’s a lot you can lose by sticking with traditional thinking.
That’s why early retirement is an idea that’s being embraced by a growing number of people over time. What if instead of retiring only within the last couple of decades of your life, you could spend as much as 20 or 30 years doing as you please without having to worry about a working life? It’s a question that has a lot of people wondering how to retire at 50, or potentially an even younger age, to get a chance at more time to enjoy life.
Retiring at this younger age is very possible for many people, but the process of getting there looks somewhat different from the normal route. It involves less reliance on standard retirement accounts like an IRA or 401k and a much higher degree of saving and living minimalistically until the goal is reached. There’s no doubt that some sacrifice is required during your working years to get there, but in this guide, we’ll give you an idea of what you’ll need to do.
Consider your costs and set a goal
You may have a solid idea of how much you’d like to spend once you’ve reached retirement age, but do you know how much you’ll need to spend after you retire? Necessary expenses should be your foremost consideration when it comes to planning for an early retirement. While you can potentially withdraw funds from certain traditional retirement accounts after age 60 tax-free, this isn’t likely to be an option when retiring at an early age.
Instead of determining how to accumulate a certain amount of money by a specified retirement age, start with just the financial goal alone: how much do you need to retire? What are your expenses likely to look like at age 50, and how much would you need annually to cover those costs? Depending on how you go about accumulating that money, you may find yourself ready to put a stop to your working life well before your anticipated retirement age.
Live well below your means until retirement
The reality of retiring by 50, or at any early retirement age, is that it’s going to take a lot more saving than would otherwise be called for. There are a few reasons for this: to accumulate your savings at the rate needed to reach your goal early, regardless of what that goal amount actually is, you’ll likely need to contribute more money on a regular basis than you would if your intended retirement age were further off.
Additionally, there’ll likely be additional expenses to consider related to those contributions. Much of the money you save may be placed into a portfolio of investments that can compound your savings over time, allowing your money to grow at an even faster rate than through your contributions alone, but these investments will likely be taxed in a way that traditional retirement portfolios typically aren’t.
Find a financial planner suited to your goal
Regardless of how you plan to go about saving up for retirement, you shouldn’t do it alone. Get the help of an expert financial planner to make sure you’re taking every necessary detail into account and following the most efficient, effective strategy for reaching your retirement goal early.
OWLFI can offer the retirement planning expertise you need to make retirement at age 50 a reality. Call or email now to learn more or get started.