Many individuals find the idea of retiring from the workforce at age 65 so overwhelming that they haven’t even given a second thought to the possibility of being able to retire when reaching the age of 50. However, this does not mean that it will be impossible to retire at this age – especially if you plan accordingly. If you would like to retire a decade and a half sooner than anticipated, the advice below can help you achieve this goal in a practical manner.
Aim to Save Approximately $1,000,000
The average employee will require approximately $1,000,000 in savings if they intend retiring by the time they reach 50. This means that the earlier you compile a practical savings plan and put it into action, the sooner you can achieve this financial milestone. While it’s strongly recommended that you start saving for your golden years in your 20s, you can still make a plan if you’re older. Financial experts recommend that your savings be invested in such a way that they will be able to provide you with a return rate of at least 6%.
If you follow this advice, you’ll need to save approximately 35% of your earnings if you make $40,000 annually. However, I you’re earning $60,000 a year, you will need to set aside a little less than 25% of your paycheck. If you’re fortunate enough to earn six figures, you will only need to save a little less than 15% of your earnings.
Practical Ways to Save
Just the thought of having to try and save $1,000,000 in a 25 to 30 year timeframe can seem like an impossible undertaking, but it is quite possible to achieve this goal. Some individuals have even been able to achieve this savings figure before they reached 40. Below are some ways that early retirees were able to reach their savings goals:
- Automating savings. When a specific amount of money is deducted and placed into savings each week or month, the chance of you saving regularly is increased substantially. In most cases, savings in this way will also mean that you won’t miss those funds
- Wait as long as possible before moving out of your starter home into a larger property, and pay as much extra into your mortgage as possible during this time
- Eat at home more than you visit restaurants or drive-through lines. This will benefit your wallet and your waistline over time
- Reduce transport expenses wherever you can. If your car is paid off, keep it as long as it’s safe to do so. Walking, cycling or even using public transport wherever possible can help cut your gas and maintenance bill substantially over time. Combining as many errands as possible into a single trip will not only save money, you will save a lot of time as well
- Eliminate, or at best, drastically reduce junk food consumption and trips to the mall as a form of entertainment. Your wallet and retirement fund will thank you
Keeping track of everything you spend your money on will help you determine where it’s possible to make budget cutbacks. The best way to do this is to keep a dedicated spending journal, where even the smallest expense is noted. Taking action by implementing the advice above will help get you on your way towards saving for a comfortable retirement.Continue reading
For many people, the idea of retiring at age 65 is overwhelming enough, let alone the prospect of retiring at age 50. That doesn’t mean that retirement when you are only a half-century old isn’t possible, particularly if you start planning early. Just how much money will you need in order to retire a full 15 years early? Here is a guideline.
Shoot for $1 Million in Savings
The financial website Nerd Wallet estimates that the average person will need approximately $1 million in savings if he or she is to retire at age 50. They also provide some calculations designed to help you determine how much to save. Of course, the earlier you begin saving money the better. Ideally, you should begin in your early 20s, and invest your funds in such a way that you earn at least a six percent return.
Follow those guidelines, and you will need to put back 34.6% of your income if you earn $40,000 per year. You’ll need to save slightly less than ¼ of your paycheck if you make $60,000 annually. If you are able to draw six figures, the amount you must save decreases to under 14%.
Ideas for Saving Money
The idea of saving one million dollars in a 28-year timespan may seem overwhelming, yet doing so is entirely possible. In fact, some people have been able to save enough money that they were able to retire before age 40. A few of the ways early retirees are saving money are to:
- Make savings automatic. When you have a certain amount automatically set aside every month, you are more likely to develop a pattern of saving. Not only that, but you will likely not miss what you do not see.
- Create more “made from scratch” meals at home and eat out less often. Not only is this healthier for your wallet, but it is also better for your waistline.
- Stay in your starter home longer, and double up on payments so you can become mortgage free sooner.
- Cut back on transportation costs whenever possible. If your vehicle is paid for, hold onto it as long as you can. Walk, bike, or take public transportation to work at least one or two days each week. Look for opportunities to carpool or combine errands to prevent too much running around.
- Eliminate non-essentials such as cable television, convenience store snacks, and going to the movies.
Tracking your spending habits will enable you to identify ways in which you can cut back. It will also help you adjust to living a minimalist lifestyle-something you should definitely consider if one of your goals is to retire at age 50. Keep a spending journal, and within the first month you should discover areas where you could trim your monthly budget.
Is it really possible to retire well before you are eligible for Social Security? The answer is “yes”, provided you make a few lifestyle changes now. The sooner you begin saving money, the faster you will be able to reach your goal of retirement.Continue reading