Can I Retire At 49

Date:

Super Early Retirement: Between Age 30 49

Can You Retire Early With 100% VTI Using the 4% Rule? | Q& A

Theres a new movement called financial independence, retire early , where many people are choosing to adopt a very focused and ambitious goal of retiring very early in their life, usually by saving a lot of money and investing in the stock market or Exchange-Traded Funds .

It requires a lot of discipline in your early years of life, with many starting to save in their 20s or even as teens aggressively.

While there are many benefits of retiring early, there can be a lot of risks in retirement planning for extremely early retirement. Youll have to consider the huge sacrifices that will need to be made and the unpredictability of life.

Theres a lot that can happen in life that would throw your calculations off, and you may need to either start working again or abandon it altogether.

Youll also need to find other projects or things to find meaning and satisfaction from doing. I had some personal experience with the FIRE movement, and you can learn about it here.

Before You Make Your Decision

There are advantages and disadvantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit will be reduced. Each person’s situation is different. It is important to remember:

  • If you delay your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your monthly benefit.
  • That there are other things to consider when making the decision about when to begin receiving your retirement benefits.

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Jim Poolman Of Indexedannuitiesinsightscom

Jim is the Executive Director of Indexed Annuity Leadership Council and former insurance commissioner of North Dakota. The IALC provides comprehensive and accurate information about the use of indexed annuities.

How much do you need for retirement and why?

With healthcare costs likely to exceed more than $250,000, I, like many baby boomers, will need more than $1 million to retire comfortably.

Like the other financial experts in this article, Jim also considered his cost of living, and dreams of travel when he calculated his retirement goals. He also used retirement calculators to make the process easier.

He continues, I like the calculator at FIAinsights.org because it allows you to hone in on specific aspects of retirement planning. You can get a retirement number or plan thats specific to your situation after answering a few questions.

What conservative investment option can you recommend to a friend whos afraid of risk?

The best approach is to balance your portfolio. Look into a fixed indexed annuity, which provides increased sustainability while mitigating external risks to your investment. The market may swing, but your principle investment will be protected.

The fixed indexed annuity he recommended also provides a guaranteed lifetime income, so theres no risk of outliving your earnings. Be warned though, investments like this are usually expensive.

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Why Did The Full Retirement Age Change

Full retirement age, also called “normal retirement age,” was 65 for many years. In 1983, Congress passed a law to gradually raise the age because people are living longer and are generally healthier in older age.

The law raised the full retirement age beginning with people born in 1938 or later. The retirement age gradually increases by a few months for every birth year, until it reaches 67 for people born in 1960 and later.

Jacob Lumby Of Cashcowcouplecom

Amazon.com: Funny Retirement Tee I

Jacob Lumby is the Content Director and one of the trios who run Cash Cow Couple. With his wife, Vanessa, they teach other married couples how to save money, pay off debt, and build a stable financial future.

How much do you need for retirement and why?

I would feel comfortable retiring with $1 million in available assets. Using 3% as a conservative withdrawal rate, a $1 million portfolio will produce $30,000 a year. That amount will be enough to cover all of our expenses because of our minimalist lifestyle.

What conservative investment option can you recommend to a friend whos afraid of risk?

Risk and rewards are inseparable for investors. Low-risk investments dont offer large potential returns. But there are options for people less comfortable with investment risks.

Real estate is more stable compared to stocks, and firms like Fundrise make it easy to invest in commercial real estate offerings without excessive fees.

Jacob also suggested short-term bond funds as a conservative investment option, for investors who think real estate isnt for them.

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Matt Reiner Of Getwelacom

Matt is the CEO and Portfolio Manager of Wela, a financial planning software that provides users personalized financial advice and a host of budgeting and financial tracking tools. Check out their free e-book Economic Shutdown: 30 Day Financial Cleanse.

How much do you need for retirement and why?

I need to save $2.2 million to retire. I based this number on my current expenses plus the inflation rate. Then I deducted my monthly mortgage and the cost of raising kids to that number.

While Matt doesnt have kids yet, he already plans not to retire until his kids are independent and all his debts are paid off.

After calculating his monthly expenses, Matt came up with an estimate of how to generate his monthly expenses based on several investments. He adds,

I determined how much of a nest egg I need to earn via the dividend rate of my stocks, the interest rate I earn on bonds, and the distribution rate I get from other investments, like real estate.

His long term goal is to earn enough not to touch the principal funds during retirement. He also didnt account for social security pension, preferring to leave that as a buffer in case the market changes.

What conservative investment option can you recommend to a friend whos afraid of risk?

Buy short-term bonds to start getting comfortable with investing. Although bonds wont provide huge financial gains, and they could be affected by inflation and low yields, this will help anyone learn the ropes of investing.

She Invested In Her Employer

Even before Koski joined the investing club, she had been contributing to her 401 account at work, and she even contributed enough to receive her employer match. However, she admits that at the time, she didn’t really know what she was doing.

“I never thought of it as investing at the time,” she said. “But my learning through the investment club taught me otherwise, and I started questioning what I was invested in through work. I decided that I should put my money in places where I can get both growth and a tax break, so I started maxing out my 401 and contributing to a Roth IRA.”

With a Roth IRA, you can contribute your after-tax money to an account and invest it in a variety of stocks, index funds, mutual funds and ETF’s. You won’t owe taxes on withdrawals made in retirement since you’ve already paid taxes on the money. This is why a Roth IRA can be such an instrumental part of your wealth-building plan â and there are lots of different ways you can open an account.

You can use a brokerage like Fidelity or Charles Schwab , or download a robo-advisor app like Betterment or Wealthfront, to open a traditional or Roth IRA. Robo-advisors help you determine which investments make sense for you based on your risk tolerance, goals and retirement date. Robo-advisors also take on the task of automatically rebalancing your portfolio as you get closer to the target date for your goals . This way, you don’t have to worry about adjusting the allocation yourself.

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Can I Actually Retire At 52 Yes If You Do This

Many Americans dream of early retirement. Its even the basis for movements like FIRE, which stands for Financial Independence, Retire Early. But if you want to retire as soon as 52, you need a solid strategy to help you get there. Retiring in your 50s leaves you with less time than the average worker, making it a challenge. Despite this, its not impossible. The crux of your plan should come down to saving, managing money efficiently and investing wisely. You can also consider working with a financial advisor on a plan for your early retirement.

Considerations When Retiring at 52

Before you settle on 52 as your goal retirement age, you should review your situation. Here are some of the most important questions you can ask yourself to help you evaluate:

  • What kind of lifestyle do I want to have in retirement?

  • How much money do I need to afford my desired lifestyle on an annual and monthly basis?

  • What types of monthly expenses do I expect?

  • How many sources of income will I have and how much can I expect overall?

  • Will I keep working, either as a side hustle or part-time?

  • What do I expect my health to look like long-term?

  • What is my anticipated life expectancy?

  • How will I pay for medical expenses before I am eligible for Medicare?

  • Do I have or need a plan to cover long-term care?

Maximizing Your Retirement Savings

Make a Plan for Taxes and Withdrawals

Figure Out Your Health Insurance Options

Bottom Line

Tips for Retiring Early

Jonathan H Todd Of Jonathantoddcom

RETIRE EARLY at 49 with $1,800,000 in Retirement Investing Accounts: How To Retire Early

Jonathan is a Chartered Financial Analyst, hes also a data analyst and author at NerdWallet. He writes articles that help readers make sense of the current economy and how it affects regular investors.

How much do you need for retirement and why?

The traditional rule of thumb is to replace 80% of your income, but Im planning to replace 100% of my income for two reasons:

  • Saving 80% of your income is hard enough, so if you aim to save higher, youre likely to save more.

  • Transitioning into retirement is easier if you save more when youre still working

He also explained how saving more of your annual income will make your retirement transition easier.

If you only save 10% of your annual income, youll be used to spending 90% of your income during your active years. But if you save 20% of your income, youll be used to living off 80% of your salary.

Saving more means youre more likely to hit your retirement goal, and youll be more adjusted to the decreased spending during retirement.

What conservative investment option can you recommend to a friend whos afraid of risk?

For a millennial like me, the definition of risk is different compared to somebody closer to retirement. For people my age, the bigger risk isnt investing in conservative investment options, its NOT saving enough.

Its risky to invest too much in bonds or other low risk assets, because those equal to lower returns.

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Early Retirement And Personal Or Workplace Pensions

Retiring early may also affect your personal or company pension. The rules for personal and company pensions vary, depending on who provides them. You will need to check your personal or company pension to see how early retirement might affect your situation.

When looking at workplace pensions, remember that:

  • your workplace scheme may not allow you to take your pension before the normal retirement age of the scheme
  • if you retire early through ill-health there may be special terms in the scheme rules that allow for the pension to be enhanced
  • if you’re made redundant with a pension, you could delay drawing it and let it build up
  • if you are going to work again, check the rules about transferring your old pension to a new employer’s pension scheme
  • if you’ve had several jobs, you’ll need details of all your pension rights

These are complicated points and you may benefit from getting independent advice.

Is It Possible To Retire At 45 With $500000

If youre like many adults, the thought of taking early retirement has probably crossed your mind at least once or twice. For most of us, its simply not an option as the financial ramifications are complicated .

Still, we sometimes hear about friends, family members or complete strangers who decided to clock out early and gamble that theyll be able to make ends meet for the next several decades. Heres a quick look to see if its possible to retire on $500K if you are 45 years old.

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Are Social Security Benefits Taxable At Full Retirement Age

Your age does not have an impact on whether you will owe tax on Social Security benefits. Depending on your earnings, you may pay federal taxes on Social Security benefits regardless of the age at which you claim.

Social Security benefits are taxed on amounts exceeding the “provisional income” limit set by the IRS. To calculate your provisional income, add up all non-Social Security sources of income, including nontaxable income such as municipal bond interest, and include half of your annual Social Security income.

Single filers earning provisional income between $25,000 and $34,000 and married joint filers earning between $32,000 and $44,000 will owe income taxes on 50% of their Social Security benefits. For single filers with provisional income above $34,000 and married filers above $44,000, up to 85% of Social Security benefits will be taxable.

Got Lucky Finding A Passion

I Can Wine All I Want I

Thankfully, I had found something more interesting to do. If it wasnt for Financial Samurai, I probably would have gutted it out until at least 40. Then I would have taken at least a 6-month sabbatical to reassess my life.

I worked in a satellite office that already had two Managing Directors. The only way Id have been able to get promoted was to move to Hong Kong or New York City. Such a move didnt make sense due to the large drop in quality of life compared to San Francisco. Therefore, staying in the same role for at least six more years would have left me bored and a little bitter.

Instead, I left at 34 and focused my energy to grow my own site. It is the creation of something from nothing that will give you the most satisfaction. Heres a post on how to be more creative.

Finally, the severance package was also a key catalyst to leave. Because my severance package provided for about five years of living expenses, it made me feel more comfortable leaving six years earlier than I had originally planned.

Ideally, I should have worked for two more years to get the perfect match. Two more years of savings plus five years of severance would bring me to the ideal retirement age range of 41-45 from a financial standpoint.

If you are unwilling to wait until 41-45 to retire, then please at least negotiate a severance. There is little downside.

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Retire At 45 With $500000 And The 4% Rule

The four percent rulea widely accepted financial rule of thumbstates that your savings should last through 30 years of retirement if you withdraw 4% of your nest egg during the first year of retirement and then adjust each year thereafter for inflation. To figure out how big a nest egg youll need, you have to match that 4% to your anticipated expenses. If you plan to live on $30,000 each year, for example, youll need $750K socked away. If your expenses will be $40,000, youll need $1 millionand so forth.

The Best Retirement Age Can Change

When I was 30 in 2007, my goal was to retire in 2017 at the age of 40. I figured, after spending my 20s learning, I should spend my entire 30s earning, saving, and investing. Just 10 more years of work and Id be set fo life!

I was regularly working 60+ hours a week and disliked it. If I worked until 40, I reasoned that 18 years of work after college was equivalent to 27+ years of work at a 40-hour a week job.

However, I couldnt last until 40 because I was burned out. As a result, I retired at age 34 in 2012 with about $80,000 a year in passive income. Because I retired so young, I ended up missing out on millions of dollars of upside because a bull market ensued after.

I wish I had enjoyed my job more so I could have worked longer. Or, I wish I could have taken a 3-month sabbatical, recharged, and transferred to a new office in a different part of the country. Or, I wished I could have landed a tech startup job in 2012 and rode the boom.

After all, nobody retires early from a job they love.

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May Not Be Too Early To Retire But It Is Too Soon For Social Security

As you work to navigate the income equation in hopes of retiring at 55, cross Social Security benefits off your list of potential income sources in the short-term. Eligibility for Social Security benefits starts at 62 for retirees. Also, you’ll want to weigh whether you should file for benefits as soon as possible or hold off for larger checks. This might mean taping retirement accounts to delay Social Security longer, at least after you turn 59 1/2.

Social Security benefits include 35 years of average earnings, so unless you started working at age 20, the Social Security Administration will use $0 salary for the last few years when calculating your benefits.

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