For many people, the day they turn fifty is when thoughts of retirement loom large.
It’s an age when you start to think about finally stopping working and resting your tired feet.
And while you may be ready to take it easy, financial experts warn that you shouldn’t stop saving and investing just because you’ve hit the big five-oh. If you want to retire at 50, you have to think about how much money will come in after you stop working and how much of it you need to live comfortably in your retirement years.
Yes, you can retire at 50, but you need to ensure you have amassed enough personal wealth to last you for the rest of your life, which could be another 30-40 years or even longer.
What is Early Retirement?
Retiring early is a wish for many, but one-third of us don't have £/$1,000 in savings and 15% don't have any savings or pension at all.
Anecdotally, it's safe to say that most won't be retiring early. What, though, does retiring early really mean?
How much do I need to retire at age 50?
How much do you need to retire on? The short answer is, a lot. Most retirement calculators suggest that an early-retirement nest egg should be 6 to 8 times your annual pre-retirement income.
That means if you’re looking to live on $40,000 per year (before taxes), you’ll need $240,000-$320,000 in investable assets.
To reach that figure, experts typically recommend starting to save and invest aggressively in your 30s—at least 10% of your gross salary and up to 15% or more if possible—and ramping up investments as your career progresses and life gets less expensive.
How do I achieve financial independence at age 40 and retire early with $2 million in the bank?
The truth is, it’s going to be different for everyone. That’s why I prefer personal finance books that encourage you to calculate your financial independence number and do a little soul searching first before setting a firm goal and hitting retirement!
How many years do I have to plan for my early retirement?
It’s not a matter of if but when. That said, you might have to save a lot more money than you were anticipating if you want to retire early. How much is based on how long you plan to retire.
For example, if you retire at 50 and expect to live another 25 years (the average life expectancy for an American), then multiply your current age by 25.
So if you are 40 years old now, that means you have 125 months until retirement, or nearly 11 years until your planned retirement date.
What is financial freedom and how long will it take me to reach it?
Financial freedom is a term that gets thrown around quite a bit these days, with everything from books to Facebook groups focused on helping people gain complete control of their finances.
So what does it mean and how long will it take you to get there? It all depends on where you're starting from. If you're just getting into your career, financial freedom means being able to quit your day job and having enough passive income coming in each month to cover expenses (and then some).
If you're already set up with an investment portfolio that generates good returns and cash flow, financial freedom might be about creating more time for family or for travel.
Where should I retire if I want the best quality of life for my money?
Retiring early doesn’t mean you have to settle for a life of poverty and misery. In fact, if you plan ahead and research your options, you could retire to a beautiful corner of the world and live happily on less than $2,000 per month.
Where can I find a supportive community online about retiring early, financial independence, and lifestyle design?
Finding a supportive community online can be hard. If you’re trying to save money and retire early, you might feel like your family and friends don’t get it.
Fortunately, there are lots of great communities out there that do get it! Some of our favorites include @financialindependence, @personalfinance, and Early Retirement Extreme. Also check out our favorite blogs: Financial Samurai and Rockstar Finance. All have very active forums where people discuss life-design topics all day long!
Resources
Oh my gosh, yes. Bill Gates is sitting on a veritable gold mine of finance advice. His website, The Gates Notes , has 1,000's of pages of books with all kinds of financial advise for entrepreneurs and others.
Here are just a few that would be useful for someone planning to retire at 50 (and should take about five minutes to read each): First Things First , Doing Well by Doing Good , Business @ The Speed Of Thought . I'm sure you can find many more suitable recommendations in a quick search on Amazon .
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