Retire at 50 with just $2.5 million? The harsh truth + 4 incredibly simple things to do to achieve your dreams before you turn 60

For many people, the idea of ​​retiring at age 50 sounds incredible. However, many question whether this is realistic. Considering that people born after 1960 don’t qualify for full Social Security benefits until age 67, if they stop working at age 50, they have another 17 years before they can access that source of income. Additionally, most retirement accounts (such as 401(k) and IRA accounts) don’t allow you to withdraw money without penalty before age 59 ½, leaving a gap of 8 ½ years. But even so, that doesn’t mean retirement at 50 is impossible. In fact, here are four simple things you can do to get yourself on the right track.

How to retire at 50

If your goal is to retire at 50, you need to start planning now. If you don’t plan to work in retirement, you must have enough savings to last you for the rest of your life.

The average life expectancy in the United States is currently 78.4 years (according to the CDC), so plan for 28+ years of expenses—possibly 35+ years if you’re healthy and active. Therefore, you must plan to have enough money to support yourself (and possibly your family) for 28 years or more.

28 to 35 is a good rule of thumb. But if you want to know exactly how many years you have left, the Social Security Administration has a handy calculator here .

Although this may seem daunting, saving 28 to 36 years of expenses is doable. It just takes some planning, hard work, and dedication. Here’s how to get started.

1. Save as much as possible

Early retirement requires significant savings. In addition to having a solid retirement account that you can access once you turn 59 ½, you’ll need other sources of funds to cover the 8 ½-year gap.

Many people who plan to retire at age 50 open investment accounts in addition to their retirement savings vehicles. These accounts typically generate more interest than traditional savings accounts, allowing your money to grow faster. However, they are not without risks, so you need to consider your risk tolerance and choose the option that is right for you. For example, investing in index funds, target-date funds, and many mutual funds can provide a level of diversification, so they can be a good place to start if you’re new to investing.

2. Reduce expenses and increase income

The less you have to spend each month, the less you have to save. Tackle as much of your debt as possible before age 50, and your goals will become more realistic. Likewise, consider cutting back on unnecessary services, like a premium cable TV package, or other high-ticket expenses, like dining out, to make early retirement more manageable.

Consider increasing your income, too. Getting a second job, starting a side hustle, or negotiating a raise from your job are all great ideas to actually increase your income. In fact, some commentators point out that aspiring retirees can only save so much, and there is no theoretical limit to increasing their income. Reddit user Papa Secandus This was mentioned:

3. Calculate your retirement expenses

In order to determine how much you need to save, you need to understand your expenses in retirement. This includes everything from debt payments to household expenses to medical bills. Also, you’ll want to consider any changes in entertainment spending. When you retire, you may want to travel, see more movies in the theater, or take up a hobby, all of which will affect your spending estimates.

You also have to contend with inflation, which can severely impact your spending power over time. Inflation averages 2.8% per year. This means that if you need $50,000 per year now, you may need $66,000 in ten years. The Bureau of Labor Statistics has a handy inflation calculator here.

Planning for health care expenses can be especially challenging. You will not be eligible for Medicare until you are eligible for Social Security benefits. Even if your employees have postretirement health care options, premiums are typically higher than they would have been if you were still employed, so you’ll need to explore your options thoroughly to estimate the costs.

Once you’ve calculated your expenses, you can use that information to extrapolate how much money you need to save. Generally, it’s wise to plan on using a withdrawal rate of 2% to 4%. If you want to be conservative, use a 2% interest rate, and estimate that you need $50,000 per year, you would have to save $2.5 million by age 50 (if you want to retire at age 50).

4. Consider partial retirement

If you can’t save enough to fully retire at age 50, that doesn’t mean you won’t be able to dramatically change your relationship with the workplace by then. For example, you might be able to save enough to cover some of your expenses and then choose to work part-time at a job you enjoy until Social Security kicks in or you can access other retirement savings. Not only does this give you some flexibility and extra income, it also gives you more time to spend less and save.

Then, when you reach age 59 1/2, 67, or any age in between, you can reassess and move toward full retirement if feasible. This way, you can change your lifestyle earlier and make your years more fulfilling and meaningful.

At what age do you think you will retire? Does 50 sound realistic or even possible to you? Share your thoughts in the comments below.

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Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE certified personal financial counselor serving wounded warriors and their families. She now writes about personal finance and benefit planning for numerous financial websites.