How To Retire At 50 And Live Like A King (or Queen)


how to retire at 50While most people only dream about retiring at 50, there are people out there that turn this dream into a reality. What is their secret? Did they win the lottery? Rob an armored car? Print counterfeit money? While there may be a few people that did do those things, the reality is that most retire at 50 by following 3 simple pieces of advice.

How To Retire At 50 In 3 Steps

Step 1: Save More – A Lot More

Conventional thinking says that if you want to retire by 65, you need to put away about 10-15% of your income. If you want to retire at 50, you need to save more than this, to the tune of 40% or more. Why so much? First, you are going to need money to live on for a longer period of time while not earning an income. Secondly, you have to make up for the lost years that you won’t be contributing or saving to a retirement plan while you work – namely those last 15 years or so. With the power of compound interest, those last 15 years of saving really add up.

So how do you save 40% or more of your income? There are a few steps you can take:

Focus mainly on windfalls: If you get a tax refund, you need to invest all of it. Same goes for any bonuses you get at work. These chunks of money really make a huge difference in the long run. For example, if you are 35 and receive a $3,000 tax refund each year, investing that and earning 8% annually brings the investment value to close to $88,000 when you are 50.

If you get a bonus each year from work for $2,000 and invest that every year for 15 years earning you 8% annually, you have another $58,000. That’s close to $150,000 you have without really changing your lifestyle!

Pay attention to raises: don’t change your lifestyle when you get a raise. Put that money into savings. Keep living off of the same amount you are used to. It’s too easy to justify a new car here or a vacation there because you “deserve it”. The next thing you know you are spending the entire raise.

Then focus on big expenses: Look at your mortgage and see if there is way to save money there. A great option is a fake refinance. In some cases, downsizing or moving to a lower cost of living area might make sense. Ideally, though, this would not be your first choice. Follow all of the other tips and see if you can make it work where you currently live.

From there, turn your attention to insurance and see if you can get lower premiums.

After that, you need to start looking at high ticket items. One that comes to mind is a car. Drive your car for 10 or more years. When it becomes too costly to repair, buy a late model used car at a good price. Don’t fall victim to short-sightedness. This is when you look at the $1,000 it costs to repair your car and would rather have a new car and not worry about the repairs. Remember, $1,000 to fix your old car is a lot cheaper than spending $400 a month on a brand new car. Take the time to do the math so you know when it is time to get rid of your old car.

Finally, pay attention to the little expenses: I’m not saying you have to cut all of the fun out of your life, but you do need to look over your spending (you should be budgeting your money) and see if there are things you can cut out of it.

Step 2: Cut Your Spending

I mentioned the car buying above, but you really need to apply that idea to your overall lifestyle. When it comes to wanting to retire at 50, most won’t be able to buy designer goods and take luxury vacations and still quit our jobs early. It just doesn’t work that way. You have to make sacrifices in your life – sacrifice a little now for an amazing life of early retirement, or live like you want now and work until 65 or later. It all comes down to choices. You decide how you want your life to play out.

The overall reason though of why you want to cut your spending is so that you can learn to live on less. The less money you have going out each month, the less money you need to come in. If you can live on $2,000 a month, you have a greater chance of retiring at 50 than someone that needs $5,000 a month or more.

Since your mortgage is your biggest monthly expense, you have to pay it off before you retire. If your mortgage payment (not including taxes) is $900 a month, that is close to $11,000 a year less that you need to live off of if you pay it off before retiring.

The same idea applies to any other debt you have. You have get rid of that debt before you retire at 50. If you have debt, read about my snowball method to get out of debt quickly, or read my review of Ready For Zero. Either option will help you eliminate debt fast. I can’t stress this enough – the less monthly expenses you have, the easier it will be to retire at 50.

Step 3: Diversify Your Income

I’m not sure what your idea of early retirement is, but after talking with many retirees, they are bored if they just sit around all day. This sounds awesome when we have a job, but in reality, it gets old fast. We need something to do to keep us occupied. For many, we turn to our hobbies. Wouldn’t it be great if we could turn our hobbies or skills into an income? It’s easier than you think.

There are all sorts of ways to earn additional side income. Spend some time now thinking of your interests and see if there is a way to make money off of it. Maybe you work in human resources or look over resumes all day. You could sign up on Fiverr and offer resume critiques for $5. There are all sorts of options for you. If you are having a tough time coming up with ideas, check out this post.

Here is why additional income streams are so valuable. First, if you start a side business now, you can save 100% of this money (or use it to pay off any debt you might have). This will help you increase your chance to retire at 50. Secondly, when you have an additional income stream, you will need to pull less money from your investment accounts. This is ideal because the more money you have invested, the more it can grow. This lessens the chances of you running out of money early.

Final Thoughts

So there you have the 3 steps for how to retire at 50:

  • save as much as you can
  • learn to live on less
  • create additional streams of income

None of these are out of the ordinary, you just have to decide if you are going to follow these steps or not. How much does retiring at 50 mean to you? When you answer that, you will know if you can follow these 3 steps.

If you want more detailed information about early retirement, check out my ultimate guide to early retirement post and also my eBook, 7 Easy Steps To Early Retirement.

[Photo Credit: Steven Depolo]

21 thoughts on “How To Retire At 50 And Live Like A King (or Queen)”

  1. Leveraged bets in the stock market and real estate are two more ways. Nobody ever cut their way to riches. Another is start a business of your own as early as possible and sell at 50 years of age. It’s pretty hard to carry a lunch pail to work every day, cut expenses, live below your means and save 10% of your income and you’ll be able to retire early. This is a myth, a strategy that simply doesn’t work for most middle-class working people. Focus on income and increasing that #1, take some risks – start a business, sell it etc. etc.

    1. So true about no one cutting their way to millions. You have to have a nice balance of both in order to make it.

  2. We are hardcore working on all three of those things right now! We save a huge amount every month and work hard to keep the expenses as low as possible. We most recently decided to ditch cable when we received notice that the bill was set to go up by a lot and the company said they could not do anything better for the price. We don’t yet have a certain date/age when we’d like to retire by, but we think it will likely be way before age 65! Great post.

    1. We are always watching our expenses. One day, I think we will cut cable, but it just doesn’t work for us (mainly me) right now. I love watching sports too much.

  3. I don’t plan on retiring at 50, but 58 sounds pretty good! However, in order to do so we’re going to have to really downsize and move to a much less expensive area. But, I’m always up for an adventure!

    1. It’s definitely tough to retire early when you live in a high cost of living area. We live in one and are looking to move a little further away from the city to lower our costs in a few years.

  4. Jean @ NearlyRetired

    You hit the nail on the head with this one. We will be retiring at a more traditional age (55 for me, 63 for my husband) — mostly because our college and careers came later in life. But the principals we’ve used are the same: save, budget, and look at income streams.

    1. That’s great Jean! My wife and I have the goal to retire by 50. We have 15 years to go and are on track so far, but there are a lot of “what ifs” still out there. We are both looking forward to seeing how things turn out.

  5. I think you hit the nail on the head: Live off of less and figure out how to make more. Though it sounds simple, it really does just come down to those two basic things to balance the equation and retire whenever you really want to.

    1. The key is to put focus on both to some degree. You can’t just cut spending and make it and odds are if you only save as much as possible, if you don’t address your expenses, chances are you will run out of money.

  6. Great points here Jon! I’ve always wanted to “retire” by 40 using investment income such as real estate and stock.. I know that this is ambitious for me but I’d say 15 years is plenty of time and with “passive” income of around $1,500 a week (after tax) I’d say this would be plenty to have a comfortable life and even continue to keep growing an asset base :)..

    I completely agree with putting any money you get from raises into investments and continuing to live on the same amount that you did previously, especially in my case (as I’m quite happy with the amount I’m being paid) 🙂

    1. 15 years is a good amount of time. The key is to make sure you keep your expenses low and save, save, save!! If you can do that, there is no reason why you can’t retire by 40.

      1. For sure 15 years is a decent amount, if I don’t hit that exact timeframe then so be it but I’ve got things that I definitely want to pursue i.e. I certainly won’t be “retiring” in the sit on the couch and do nothing way!

        For me I’d much rather focus on keeping expenses the same and increasing income, then that way you invest your pay increases, tax return windfalls as you say in the article. I’d rather enjoy a quality of life and create extra ways to generate income, rather than sacrifice for the sake of achieving a goal cause it has to be sustainable for me, otherwise life wouldn’t be worth living anyway 🙂

  7. You had me at “rob an armored car” and “counterfeit money” 🙂

    These are all solid points. The only one that I question is paying off your mortgage before you retire. While I think that is usually a best practice, some people may have a really low interest rate where that money may be better served in investments while still benefiting from the tax write off from a mortgage. My mortgage is at 3.4% and since I think that I can make more investing that money than having it tied up in my house I’ve decided not to pay any extra to paying off my mortgage.

    Do you have a cutoff of when you think it’s better to invest versus pay off a mortgage early? I think for me if it’s 5% interest or higher than I contribute at least a little more than the minimum mortgage payments to pay it off quicker, but below that I have to take a hard look at where the market is at. With tax write offs it makes that percentage look even a little lower.

    My retirement goal is 40, but I’m prepared to work until 45 if I need. My guess is that I’ll fall somewhere in between the middle of both of those but it’s hard to say when you’re predicting 8 to 13 years in the future.

    1. You make a good point and it really comes down to how disciplined you are. Most people plan to put the money towards investing but finding something “better” than invest it. That is why I recommend paying off your mortgage first. If you are disciplined and will invest, then yes, with a low interest rate on your mortgage, you are better off finding a balance of investing/paying down your mortgage.

      But again, you could argue that your after-tax return on investments won’t be that much higher than the interest rate you are paying anyways. There is always a counterpoint with money. That is why I like it so much. Learn by reading blogs and books to see how people approach financial issues, then apply that (or some form of that) to your life. The key is to pick what works/makes the most sense for you and what you will stick with long term.

  8. With my status, I plan to retire at 60 in order to get the ideal retirement benefits. It’s kinda too late. Most of you want to retire before 60 which makes me think how I can get that financial stability sooner. I have a fear of missing out so I think I will just work and work until 60 or even after so that I can get the retirement life of a king. How good is that?

    1. I think it all depends on your goals and your definition of retirement. For me, I think I will always be working. The difference is that I won’t be at a 9-5 job working for someone else. I’ll have the money to turn a side business or hobby into something that can earn me some spending money.

  9. There are different ways to retirement at 50 but the three principles you mentioned are probably universal. I speak from experience: my husband retired from his job at 50 and I’m looking to not have to be employed if I don’t want to by October, 2018 when I’ll be 55. It is not that hard,really; you need discipline, patience and ingenuity to up your income.

    1. That’s a great goal Maria! My wife and I hope to retire by 50. We have a plan in place as so far, all is well. There are a lot of uncertainties in the future, but we are confident with the right planning and discipline, we can reach out goal.

  10. Great thought about getting a raise. Instead of purchasing that new car, invest that raise into something that will make you money instead of drain you of it.

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