How to Retire at 50 (in 7 Easy Steps)
- Written by News Company
Retiring at 50 is possible but it’s not something that everyone can do. There’s a good reason for this, you need to start planning early and saving early if you’re going to retire at 50. It’s no good hitting 45 and suddenly deciding you’re retiring in 5 years, it’s highly unlikely that you’ll have the money to do that!
But, if you’re prepared to start early and connect with a good financial retirement planning firm, you can achieve your goal of retiring at 50. However, you should have more than just a financial plan, there’s plenty of life in you after 50, you’re going to want to do something with that time!
Here are 7 steps to get you to your early retirement:
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Start Early
The first step, as already mentioned, is starting early. The earlier you start the easier it will be to build up a fund to live on. This is thanks to compound interest, the longer funds sit in an account the more interest they’ll earn. But, when saving for retirement you’ll be using a mixture of investment accounts and compound interest. In short, all the interest you earn actually earns you more interest. It’s the fastest way of growing your funds.
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Maximize Savings
Of course, the only way compound interest can do its job is if you start saving hard today. Put it this way, saving 10,000 a year for life should earn you in excess of 656,000 in 30 years, thanks to compound interest. But, if you only save 5,000 a year the figure will be closer to 300,000, not half of what your 10,000 figure is.
The more you can save the better if you’re looking to retire by 50.
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Invest Aggressively
This step does depend slightly on how well off you want to be at 50. But your aim should be to hit at least one million in your investment account, this will allow you to live off the interest.
To do this you’re going to need to invest the funds you’re saving and you’re going to need to be aggressive. That means taking a lot of risks but the end result should be worth it. Of course, investments can go down in value as well as up, you must be prepared for that.
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Live Light
In order to maximize savings and ensure you're accustomed to spending as little as possible in retirement, you need to live frugally today. That means spending less than you earn and saving as much as possible. The lighter you can live the better for your long term goals.
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Avoid Debt
It almost goes without saying but you can’t be saving for retirement if you have debts to clear. Avoid taking out any financial commitments, with the exception of an affordable mortgage. It will help you to keep saving.
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Talk To Friends
It may seem like an unusual step but if your friends understand what you’re trying to achieve they’ll invite you on the low-cost options and won’t disturb you n the higher cost ones. This will help you maintain their friendships rather than them simply thinking you’ve gone around the bend.
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Stick To It
As you age you are likely to start earning more money and it will be tempting to spend more. However, whenever you get a pay increase simply add this to your retirement fund, it will help it to build faster and you’re already living happily on what you have, you don’t need the extra.
