How to Retire By 50

By December 1, 2019 Blog No Comments

If you feel that it’s irrational and completely unrealistic to retire by age 50 in our existing economic state, you may be wrong. It can happen with careful planning. Quality of life begins to take precedence in our late 20s and 30s and to be able to enjoy more about life than just work sounds like a sweet goal for a great percentage of people. Then once we hit the mid 30’s we start to realize we’re only halfway to enjoying retirement benefits, and naturally, we think about the possibility of shortening our working years. But seriously, who really wants to work until they’re in their 70’s?

If you decide to retire at an earlier age than your 60s or 70s it is not necessarily easy, but nothing valuable ever is. The good news is there’s nothing negative about planning ahead. The worst that can come from it is you defer your retirement year but in the interim, you saved more and prepared more than you ever thought you could. There are other ways to save or invest your money that are not listed in this post, but these are some pretty great starting points.

Plan Early – Most people, don’t just luck out and retire by 50 unless they’ve won the lottery. It takes some solid planning and focus to be able to retire by 50. In order for you to retire by 50 you will need to have enough income to cover your expenses plus enough to replace the income you would have received from Social Security had you kept working until your mid-60s. Additionally, you need to have a plan for medical insurance/costs, since you won’t be eligible for Medicare and people over 50, tend to spend more on healthcare than the under 50 crowd. 

If you’re able to save a high percentage of your income at an early age, say 20% from age 20, you just might be on the horizon for retirement at 50. If you start saving at a later age like say age 30, then you’ll want to double the percentage of income you save to 40% to comfortably retire by 50.

Eliminate/Reduce Expenses – Eliminating Debt (i.e. student loans, mortgage payments, car loans, consumer debt) is the most logical way for you to cut expenses because they are often the most sizable expenditure in a person’s cash flow. That being said, the outstanding debt could prevent you from saving enough to retire by age 50 because what would normally go into savings, is going towards bringing down your debt. So what can you do? Eliminate debt that is in your control like credit card debt from spending above your means, buying things that are not necessary. For example, many people don’t realize how the little luxuries really add up like buying $5 cups of coffee twice a day. At the moment you may think, “I work hard, so I deserve to pamper myself a little bit.” Yet the reality is, that “little bit” costs $3,640.00 a year at $10/day. It adds up.


Create a Stable Income Stream(s) – Some people are lucky enough to have pensions (government employees), most people aren’t — so it is vital to create a stable income stream to replace or exceed your current income from full-time employment or small business income. This could be from a dividend producing portfolio, rental properties, or a business which the owner does not have to operate. 

Don’t feel trapped by your salary, it’s not the only way to grow your income. You can invest in stocks and strategize your investing techniques in a way where it’s low cost and low risk, yet robust so that it can become a significant part of your income stream. 

Be mindful of taxes – Taxes can eat up your savings, so it is vital to invest in a tax effective way. That means that you want to get into investments that can boost your cash flow tax-free like a 401(k) or an IRA. By doing that you will increase your savings because you’re saving more of your salary as it grows faster. You might also be able to have your employer match your

401(k) contribution which only means even more money.

Set a savings goal – One of the greatest ways to escalate your savings amount is to create a savings goal. You may want to save 20% of every paycheck, or set a specific number that’s realistic to you like $10,000 each year. You can also consider maxing out your Roth IRA.

When you make a savings goal, you make a promise to yourself: you are going to save money. Once you set your goal, you’ll feel motivated to meet it.

Now if you have a career that is not very taxing on your overall health and you enjoy working, that’s a whole other ball game. Some people believe that they will no longer be themselves if they stop working. In fact, that may be what keeps them feeling alive and sharp. There are also the people whose social existence revolves around the people they interact with daily at work and that gives them a healthier outlook since it has been proven that people who have daily social interactions have a longer life expectancy than those who don’t because of the cognitive stimulation. 

Share some of your saving tactics with us and let us know about some fruitful investments you’ve made or know about.

About Woven Capital

Aaron Hatch is a Certified Financial Planner and co-founder of Woven Capital, a fee-only financial planning and investment management firm that specializes in helping people balance life, work, and community. Aaron has been quoted in various publications, including The Chicago Tribune, US News and World Report, and the Huffington Post among others. Aaron can be reached at aaron@wovencapital.net