How Can I Retire At 55

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Pour Everything Into Investing

Can I Retire at 55 with $1,000,000 || Retirement Income Strategies Retirement Investment Planning

You need to put every extra dollar you can toward investing if you want to retire early. For example, if your typical vacation costs your family $5,000, you may want to cut that in half and put the other $2,500 toward investing. What if you could cut your grocery budget by $100 a month? Thats an extra $1,200 a year toward investing. Here are other areas you may want to look for savings:

  • Clothing
  • Gym membership
  • Subscription services

Can you imagine how much money you could be putting away for retirement every month if you cut just $15 from each of these budget categories per month? Thats $90 a month $1,080 a year! What if you doubled that amount and cut $30 from category? You determine whether or not you get to retire early. Its all in your hands.

How Might My Income Needs Change Over Time

This is another key point to consider. Early in your retirement you may want to spend more, enjoying your freedom, travelling and treating yourself. Later on you may settle down and begin to spend less but later still there may be a need for expensive long-term care. These changing requirements may influence how you decide to take your pension.

You May Have A Long Long Life Ahead Of You

A woman who retires at 55 will have to make her savings last for 28.6 years, on average, compared to 20.4 years if she retires at 65. A man who retires at 55 will have to stretch his savings for 25.1 years, rather than 17.8. And for couples who make it to 65, there’s a 25 percent change that the surviving spouse lives to 98, according to the Society of Actuaries.

“With improved health care, many people are living longer than the national averages, says Angela Dorsey, a certified financial planner in Torrance, California.

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Health Insurance Options Before Medicare

Unless your spouse is still working and you can join his or her health insurance plan, paying for health insurance on your own may be prohibitive. With Medicare eligibility beginning at 65, what are your options for health insurance if you retire at 55?

  • Retirement health insurance continuation from your employer
  • COBRA coverage
  • Private insurance exchanges
  • A spouse’s plan
  • COBRA coverage generally only lasts for 18 months if you retire early, and you need 10 years. The public exchanges will usually be more affordable than private insurance, but it’s still really expensive, and the cost varies by state.

    According to this calculator from the Kaiser Family Foundation, two 55-year-old adults in Boston, MA would pay a premium of $995 per month in 2020 for a silver plan, assuming they’re not eligible for subsidies. The same couple would pay $1,590/month in Jupiter, FL and $1,359/month in Houston, TX.

    Can I Retire With A Million Dollars

    How much do i need to retire at 55

    Is a million dollars enough money to ensure a financially secure retirement today? A recent study determined that a $1 million retirement nest egg will last about 19 years on average. Based on this, if you retire at age 65 and live until you turn 84, $1 million will be enough retirement savings for you.

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    How Much Retirement Income Will I Need

    A popular way to estimate this figure is the 70 per cent rule, which states you will need 70 per cent of your working income to maintain the lifestyle you want in retirement. So if you retire on a salary of £50,000 you would be looking at achieving an income of around £35,000.

    For some people 70 per cent may be generous and they would be comfortable living on less. Conversely, others may struggle.

    Option : Retire Fully At Age 60

    You work hard for your money and love the idea of getting to enjoy your retirement savings while you still have energy to chase your big life dreams. So, what would it take for you to step out of the workforce and into the good life at age 60?

    Since youll be dipping into your retirement fund five years early, weve upped the saving ante to $2 million. In this scenario, you have five extra years to save for retirement at full speed. So it doesnt take that much more a month to go from $1 million to $2 million.

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    You Sacrifice The Power Of Compounding Interest

    Time is your friend when you are saving for retirement, but not when you are spending. If you sock away $250 a month $3,000 a year from age 25 to age 55, you’ll have about $237,000 when you retire, assuming you make no withdrawals and earn an average 6 percent annually on your investments. Seemingly not a bad return on your $90,000 in contributions.

    But let’s say you work 10 more years and retire at 65. In that scenario, you’ll have about $464,000, nearly double. Why? The extra decade’s worth of contributions helps, but that only adds up to $30,000. The real growth comes from another 10 years worth of interest earned not only on all the principal you contributed but also the interest earned on the interest that has compounded for four decades.

    Can I Retire At 55 With 300k 6 Ways To Understand If 300k Will Be Enough To Retire At 55

    ð´Can I Retire on $250,000 Savings at Age 55

    Can I retire at 55 with 300k in savings or a pension?

    55 has been one of the traditional early retirement ages as its when some people can access their pensions

    At 55, you might want to achieve more of whats important to you rather than whats important to other people like your boss.

    You could retire at 55 with 300k as long as you knew that this would provide for the lifestyle you wanted. You would figure this out by understanding what good looks like and costs. Once you know this, you can determine if or what 300k will provide in retirement to support that lifestyle.

    So you want to retire. What are you planning to retire from and retire to?

    Understanding what retirement means to you will be the first part of the process.

    Read on to hear how you might retire at 55 with 300k.

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    Summary: Can I Retire At 55 With 300k

    Planning for a meaningful retirement might well be the best tool to answer many of your money questions.

    Making sure you have plenty to do and even possibly get paid for will help keep you in the manner you wish to live in in the short and long term.

    Maintaining meaningful projects will be your best insurance against old age.

    Figuring out what good looks like to you and not just the average amount people retire on at 55 is a great way to get your numbers as accurate a possible.

    Understand where any other income might come from, filling any income gaps before receiving your state pension.

    Ensure you know what state pension you can expect to receive to prevent any nasty shocks if lower than you need.

    Anyway, those are my thoughts on can I retire at 55 with 300k let me know yours in the comments below.

    Make Sure You Mind The Pension Gap

    If you retire at 55, you will have to wait at least 10 years before getting your state pension.

    So any pot of money you have has to cover at least 10 years of living costs.

    Also, make sure you have checked your state pension forecast to know what you might get.

    If you have any missing years of contributions, you might receive less than you expected.

    You can get your stet pension forecast here

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    Can A Couple Retire On $1 Million

    Yes, a couple can retire on one million dollars. Annuities can provide a guaranteed income for both spouses lifetimes. After researching 326 annuity products from 57 insurance companies, our data calculated that $1,000,000 would generate $47,500 annually starting immediately if both spouses were age 60, $54,450 if both spouses were age 65, and $57,200 if both spouses were age 70.

    Should I Hire A Financial Advisor Or Do It Myself

    How Can I Retire At 55? [It

    We covered a lot up to this point and you should have a pretty good idea of what it takes to retire early at 55. But heres the million-dollar question:

    Do I have the expertise to understand, implement, and monitor every facet of my finances in retirement and do I really want to?

    When making this decision, be honest with yourself and think about the repercussions of making mistakes. Keep in mind that the long time horizon in retirement compounds any mistakes you make. A large amount of personal finance knowledge and expertise is needed, which can increase your margin for error.

    Will you really spend the time to keep up on changes to the economic, legislative, and tax landscapes? Is this something you are really interested in doing? If the answer is no, then it probably makes sense to consult with a few financial planners. At the very least, you will be able to get a good sense of the planning work thats needed after speaking with them.

    A Certified Financial Planner can help you custom tailor a comprehensive plan that helps you accomplish all of your goals. Above all, a CFP® will provide invaluable peace of mind when things change. Remember that your retirement plan will need to be adjusted on an ongoing basis.

    It pays to have an experienced guide on the most important journey of your life.

    Also Check: Average Retirement Savings For Married Couples By Age

    Can I Work Part

    You can work as much as you like after starting to take your pension – even full-time, if you wish. Legally there is no such thing as ‘retirement age’, and no employer can force you to retire unless it can be proven you are no longer capable of doing the work.

    What you do have to bear in mind is your income tax. Pensioners are subject to the same income tax rules as everyone else, so if your income is above the personal allowance you will pay tax on it. Earning a salary may therefore eat into your pension income, thus removing some of the benefits of being a wage-earner.

    What Is Our Target Nest Egg Size

    Okay. Now we have our target retirement income size.

    From here, we can reasonably estimate the size of our target retirement nest egg by using our old-friend, the 4 Percent Rule.

    Remember: The 4 Percent Rule says that says you should be able to safely and consistently withdraw a portion of your retirement savings equal to 4 percent of your starting nest egg balance year over year with inflation adjustments for the next 30 years regardless of whatever happens in the markets.

    Since our goal is to retire by age 55, that will take us to at least age 85 .

    To calculate your target nest egg size, simply divide your target retirement income by 4 percent:

    $41,175 / 0.04 = $1,029,375

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    Is Retiring At 55 Feasible

    If you have a defined contribution pension, you can start withdrawing money from it at age 55 . But just because you can withdraw pension money at this age, it doesnt necessarily mean you should. Our research reveals you would need to have built up substantial savings to be able to retire at 55 without depleting your pension pot too quickly.

    The Pensions and Lifetime Savings Association has calculated that you would need retirement income of £20,800 a year to fund a moderate retirement, or £33,600 a year to fund a comfortable retirement1. However, our analysis shows that a 40-year-old who earns £60,000 a year, has a £75,000 pension and £10,000 in ISA savings would run out of money at age 68 on retirement income of £20,800 a year, or age 62 on retirement income of £33,600 a year. This assumes they pay £3,000 a year into ISAs until age 55, that their pension contributions remain at 8% of salary, and their investments grow at 4% per annum after fees and inflation2. Despite these diligent savings habits, retiring at age 55 is unlikely to be affordable for this individual.

    Now lets imagine a 50-year-old who earns £75,000 a year and has more substantial pension and ISA savings of £250,000 and £100,000, respectively. They could take annual retirement income of £20,800 from age 55 without running out of money, or £33,600 a year until age 71. This is based on the same investment growth and pension contribution assumptions as above and a higher £9,000 annual ISA investment.

    Can I Retire At 55 With 300k

    Can I Retire at 55 with $2,000,000 || Retirement Income Strategies || Retirement Income Planning

    On average a retired individual will spend £19,000 a year, whilst the average couple in retirement spends £25,000 a year. This means if you retire at 55 with £300k,an individual will run out of funds in approximately 15 years, and a couple in 12years.

    So, on paper, it doesnt look like enough. But your motives and goals in retirement are likelycompletely different from the next person.

    Only you know what you want to do in retirement. £300k might be perfectly adequate for your needs.

    If youre hoping to retire early on £300k, you need to understand how your lifestyle can look, then you can figure out the costings.

    To properly plan for retirement, you need to do more than just have a specific amount in mind. You need to focus on what you want that amount to do for you.

    Great lifestyle financial planning is about moving money around your timeline, so its in the right place when you need it and helps you achievethe lifestyle you want. And remember its about factoring in all your assets, not just whats in your pension pot.

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    Why Saving More Equals Needing Less

    One of the most under-estimated aspects of financial freedom is just what an important role frugality plays.

    Take a good look at the chart above notice anything interesting?

    In every row, you earn the same amount of gross income. But as our savings rate changes, your net income is reduced.

    Is this a problem?

    In reality, no. Since your income is spread out of the over the course of a year, you adapt. If you can stay disciplined and stick to a budget, then your lifestyle will adjust to fit this new level of income.

    And then something beautiful happens

    Because you need less money to cover your expenses and live happily, that means you need to save up less money in your nest egg in order to retire. And that means fewer years until reaching financial freedom!

    Example

    Take a look at the lines for 10% and 25% savings rates.

    When you compare the net income you live off of at each of those rates, its a difference of $6,666 per year in the present.

    If you can learn to live off of $32,325 instead of $38,991 per year, this shaves $187,500 off of your nest egg savings goal dropping it down from $1,029,375 to $841,875.

    At that pace, youll reach financial freedom in 24.4 years instead of 36.8 years, a difference of approximately 12 years!

    Doesnt that seem worth it to give it a shot?

    How Adjusting Your Savings Rate Will Lower Your Number Of Years Of Saving

    As you can guess, to reduce the number of years of saving required, were going to have to bump up that savings rate.

    And potentially by a lot!

    But by how much?

    Well, the answer will depend on you and what age youre starting at.

    If we were to run through this same model over and over again using multiple savings rates, we can get a very clear picture of just how much time well need to achieve our goal.

    Example

    Say weve only got 20 years until we turn age 55.

    Using our chart above, we can see that well need a savings rate of roughly 30-35% to accomplish this goal.

    Can someone really retire with a nest egg of $500,000?

    Absolutely! Check out my post How to Retire on $500,000 In Your 50s or 60s for all kinds of good tricks to make your dollars stretch.

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    So Should You Retire At 55

    Remember it depends on what your own lifestyle, goals, values, and expenses are! The 4% rule is ultimately just a tool to give a rough idea of what your investment returns should look like.

    Before you retire at 55, or any age, check out the free retirement planning workbook. I also recommend talking with a fee-based, fiduciary financial planner who can help you assess your specific financial picture.

    What Is The Lowest Social Security Monthly Payment

    How To Retire At 55 With $1 Million

    DEFINITION: The special minimum benefit is a special minimum primary insurance amount enacted in 1972 to provide adequate benefits to long-term low earners. The first full special minimum PIA in 1973 was $170 per month. Beginning in 1979, its value has increased with price growth and is $886 per month in 2020.

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    Planning To Retire At 55 What You Need To Consider

    For many of us, retiring at 55 is the dream. Spending your time the way you want and not having to answer to anyone except yourself.

    If thats your plan, its important to ensure you understand the rules on accessing your super, how big your nest egg needs to be, the tax implications and any financial assistance you may be able to receive.

    To help you take the leap into life after work, SuperGuide has put together a simple guide answering common questions asked by people retiring at age 55.

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