Often times, when talking to people over 50 years old, it can seem like their primary reason for working is to one day be able to retire.
Many 50+ year olds have achieved most of their financial goals, and if they exercised financial discipline for long enough then they have probably obtained significant fiduciary benefits (like accrued vacation time, saved bonuses and annual pay raises), giving them a taste of the “good life” – life without having to go into the office.
There are always stories of those who have broken free from “the man” and retired at 50, but often times these lucky folks are military, police or firefighter retirees.
But, despite the scant number of examples of work-a-day people who have retired by 50, there are some very real steps which can be taken to make it a possibility.
Decide How Much You Will Need
The primary factors working against the 50 year old retiree are the facts that they will have less time to save, less time for their savings to compound interest, and they will need to stretch those savings farther.
In order to know where to start, you will need to determine just how much you will need in order to live out the rest of your days comfortably. Whereas many who retire at 65 need $500,000 to $1 million dollars in order to retire comfortably, the 50 year old retiree's number may be more like $1.5 million to $2 million.
Work with a financial planner to come up with a definite retirement savings figure.
Save and Invest Aggressively
In order to get to your targeted savings in time, you will need to reduce unnecessary expenses now, and invest those savings aggressively.
Think of it this way: you will be foregoing some of life’s pleasures now in order to retire early and live them permanently – not just while you are on vacation.
But you may wonder what “aggressively” means exactly.
One school of thought, though in reality may be easier said than done, says that you should live on about a fourth of your income and save the other three fourths.
Develop a Valuable Skill
While saving for retirement, you are unlikely to spend as much money as other Americans going out to eat, going to Disney World and going to the movies.
What to do with all that spare time?
Developing a valuable skill could be an excellent way to not only fill the time, but also to set yourself up to continue earning into retirement.
For example, say you have always been interested in woodworking. Instead of spending your money on the overpriced food in your local restaurant district, you could invest in night classes. After a few years, you will have a skill that you can use to earn money in “retirement.”
As a freelance carpenter, you could work on the projects which interested you, when you wanted. The same goes for developing other valuable skills.
Learn to Live Without Money
Since the beginning of time, people have lived without paper money. By bartering, you can trade your way to the things you want.
Perhaps you perform a service for someone who will give you an item you need in return. Maybe you will swap your home with someone in order to save on vacation expenses.
In order to be prepared to retire at 50, it would be a good idea to become well familiar with many of them in the preceding years.
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