How to Retire at 50

Historically, most folks consider waiting until around age 70 to retire, but some ambitious souls ponder retirement at 50. When speeding up your retirement timeline, consider some of the challenges. You can’t withdraw funds from your IRAs before age 59 1/2 without paying a 10 percent penalty plus taxes. Plus, you can’t claim Social Security until 62 -- and it’s only a partial amount until you turn 65, 66 or 67, depending on the year you were born. But if you hate the thought of working any longer and choose to retire at 50, you can do so effectively with some disciplined strategies.

Ramp Up Savings

If you consistently save at least 75 percent of your net income for a five-year period -- which means living off 25 percent or less of it -- and invest it in assets that can generate income, such as bonds and dividend stocks, you can retire at 50. This strategy has succeeded for Jacob Lund Fisker, author of the “Early Retirement Extreme” blog. Fisker manages to live on $5,000 to $7,000 a year, and he’s done so for more than 10 years.

Have the Right Mindset

If $5,000 to $7,000 a year is what you typically spend on your two-week vacation, you need to change you mindset completely to retire early using the living-off-little strategy. Fisker, who lives in the San Francisco Bay Area, spends $270 a month for his half of rent and utilities, $95 a month for health insurance, $75 to $100 a month for food and $50 a month to share a car with his wife. Those are his biggest expenses. His wife works and spends a similar amount.

Move or Downsize

Housing typically is the largest part of a budget. Paying a mortgage usually eats up 30 percent to 35 percent of the average household budget, according to Forbes. By downsizing or moving to a cheaper part of the country, you can drastically cut your expenditures. Inexpensive places to live include Modesto, California, Spokane, Washington, and Knoxville Tennessee, according to Forbes. Texas, Nevada and South Dakota have no state income tax, so living in those places can save you some money, too.

Start Bartering

When you’re trying to cut expenses, considering bartering: You trade whatever you can do for something you need. Instead of asking your doctor whether you can get a prostate screening in exchange for doing his taxes -- that could be awkward -- join a bartering club where people regularly exchange goods and services. Anything goes in bartering clubs -- carpet cleaning, dental work, piano lessons and even getting tattoos.

Work Temp Jobs

Just because you were successful in retiring at 50 doesn’t mean you can never work again. You might find it necessary to make some extra cash from time to time. Working a six-month stint at something is much different from working for years on end. You might even find the work enjoyable knowing that it’s only temporary.

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