How to Retire By 50: 5 Steps to Retiring Early

Most people in 2021 plan to retire by 62 years old. But what if you want to retire at 50? That sounds like a laughable goal to most millennials who are drowning in debt and working four different side hustles just to make ends meet and maybe be able to afford a tiny house in the near future.

And, honestly, 62 is pretty late for many of the overworked, burnt-out employees in today’s workforce. We’re already exhausted and just trying to make it to 40. Instead, many want to extend retirement into their 50s to enjoy their wealth sooner, travel younger, and maybe try out entrepreneurship on their own terms.

To pull retirement more than a decade closer, you’ll have to create and stick to a strategy. In this article, we’ll cover a few of the top things to consider if you want to retire at 50.

How to Retire Early

1. Plan How Much You’ll Need

The first thing you’ll need to do is understand what living comfortably means to you and how much that would cost. What this ultimately looks like depends on your lifestyle and individual goals.

For example, do you plan to pay off your mortgage before retirement? Doing so will significantly reduce the amount of money you need. However, it will require living a lot more frugally now. What about travel plans? Money for children’s education, weddings, or other needs?

Then there are the day-to-day expenses, like utilities, food, transportation, health insurance and medical costs, clothing, and any other expenses. Finally, the more you can budget and account for inflation, the more confidence you can have that your money will last.

Not sure how inflation affects you? Read our helpful guide on What Is Inflation & Why It Matters to better understand why it’s important to consider as you age.

2. Account for Restricted Access to Retirement Plans

It’s crucial to keep in mind that current 401k and IRA requirements mean that you cannot withdraw from your tax-deferred retirement savings until you reach 59 ½. That means you’ll need to have a separate income flow for the first ten years of your retirement before that money is even available to you. This is one of the reasons why it’s so important to diversify your investments.

Learn more about your retirement options in our special section dedicated to helpful guides and insightful articles about Retirement.

3. Save Early

We’ve all seen the charts in school about the benefits of investing early due to the magic of compound interest. That math still holds true. The earlier you start saving, the less you may need to invest or put aside overall. In fact, most wealthy people do not live off their income; they live off of the interest and earnings of their investments.

Have trouble saving? Check out our article on How to Quickly Build Your Emergency Savings Fund for some tips that you can implement.

4. Invest Wisely

This brings us to our next point-- the power of wise investing cannot be understated when it comes to building enough wealth to retire early. Many experts recommend an investment strategy of diversifying your portfolio between high and low-risk options, typically with higher-risk options early on, to have time to make up for any losses.

A diverse portfolio is a must and may include real estate investments, the stock market, cryptocurrency, traditional retirement accounts, or other alternative investment opportunities. You may consider hiring a professional to help you create and manage your investment portfolio.

Ready to hire an investment pro to help you manage your accounts? No need! Download the Wealth Stack app and learn for FREE from our top investment pros. You’ll find them in the Speakers section.

5. Be Aware of Debt

Finally, in order to grow wealth, you’ll need to be very careful about any debt you decide to take on. It may be best to avoid debt altogether when possible. However, very few people can purchase a home or pay for a college education out of pocket.

As long as you are mindful of living within your means, avoiding purchases that are not truly necessary, and paying off any interest-bearing debt as quickly as possible, you will be well on your way to being able to retire at 50.

Already have lots of debt? Here are 7 Tips for How to Reduce Personal Debt Fast.

Learn More About Investing & Retirement

Ready to continue learning about retiring early and investing? Check out our YouTube channel for more tips and tricks to get you started on the path to financial freedom. Or, fast-track your learning and download the Wealth Stack app.