How to Retire by Age 50
20 Jun 2019
If you’re someone who wants to retire young, you’ll need to save and spend very thoughtfully. Here are the steps to retire at 50.
After turning 50, you could well have another thirty years ahead of you. That equates to about thirty-five thousand meals still to pay for, and that’s just for starters. It’s food for thought.
What you’ll need to retire at 50 is a plan. The sooner you put that into practice in your working life the better. As with most tough challenges, the secret to success lies in the prep. Here’s how to make your dream of a very long holiday come true.
Begin to Save Early
You’ll need to start saving in your early twenties or late teens. That’s because you will be maximizing the period over which interest is paid on your money. Let’s say you put aside ten thousand dollars a year when you’re twenty-five.
You could expect a sum of around 650,000 dollars when you’re 50, at a reasonable rate of interest. Delay saving until you’re thirty and you could be looking at an amount closer to 400,000 dollars.
Save as Much as Possible
You might think you’d be able to retire by saving ten to fifteen percent of your wages. That’d be fine if you planned to retire at 60.
Stopping work ten years sooner and you’ll need to consider saving twice as much. Begin saving at a point in your mid to late 20s and that percentage will rise. Whenever you get a pay increase put the additional cash into your savings plan.
Take on Extra Work
If your career isn’t as lucrative as it could be then you’ll need to find other ways to boost your income.
This could mean working plenty of overtime and taking on side jobs. The more time you spending working the less time you’ll have the opportunity to spend.
You’ll also need to use the money you need to live on wisely. Have a spreadsheet for all your expenses so that you can always be looking for ways to cut back and spend less.
A Reliable Income for When You Retire at 50
Rental income from real estate is a popular option here. You can borrow at relatively low rates and take out a mortgage that will be paid off by the time you’re 50. From then onwards you’ll have a steady income and a big lump of equity.
If you have your own business then you may be able to leave it to someone else to run while you take a regular income from it. Combine this with a dividend stock portfolio for additional benefits. Invest aggressively.
Taxes and Retirement Locations
Make sure you seek the help of a financial advisor so that you can maximize your tax-sheltered retirement contributions. If your employer offers a pension scheme, you should always consider paying into it especially if they contribute too.
With retirement comes freedom. That means you can be more selective about where you choose to live. Consider a lower cost destination to spend your retirement in.
Life is for Living!
Careful planning will mean you’ll be able to retire at 50. You will also have plenty of years left to live life to the full and without the stress of work.
Read here for more retirement tips for millennials.
