How to Retire by 50

Here's a piece from Money Central that details how several couples have retired by age 50 and what it takes to do so. It boils down to three success factors. The people who can retire at 50 are:

• Allergic to debt.
• Acutely aware of the power of time.
• More interested in their goal than what the neighbors think.

Hmmm. Those sound familiar. :-)

My take on how to get rich is fairly similar to these, and I often talk about the three items listed above. Here's what I'm doing with each of the suggestions above:

1. Yep, I hate debt too. That's why I have none. Paid off my mortgage over 10 years ago. Of course I do still charge on credit cards, but I pay them off each month. And I bought a new car a few years ago where I had a "two years same as cash" deal (I tried to get them to give me a discount instead and let me pay cash, but they wouldn't) that was torture because I again had payments. All that to say -- I am certainly allergic to debt.

2. Yep. The power of time/compounding is part of my formula for getting rich.

3. Again, it's a yes for me. I don't really care what the neighbors think of what I drive, what I wear, the "toys" I own, etc. I'd rather be wealthy and look middle class than be middle class trying to look wealthy. Heck, I'm not even interested in being wealthy and looking wealthy. Middle class is much more comfortable, laid back, and "warm" to me anyway. :-)

I think if I really, really pushed it, I could retire by 50, but I'm not sure I want to push it. The biggest category that would need to be cut back in order for me to make it is my giving, and I'm not prepared to give up on that in order to call work quits a few years early. In reality though, I do see myself down-scaling when I get to 55 or so. I should have enough saved up and the kids will be out of college, so at a minimum I should be able to take a job that generates less income as well as requires less of my time.

Comments

[Susan]

I love the idea of retiring early - and your points are very good ones, but one question keeps coming back to me, if I retire at 50, what do I do about medical insurance coverage for myself and my family? Any suggestions?

[FMF]

Susan --

Funny you should ask. I just ran into this piece today:

http://articles.moneycentral.msn.com/RetirementandWills/RetireEarly/HowEarlyRetireesInsureTheirHealth.aspx

[Anitra]

This can apply to other monetary goals, too... My husband and I are committed to having a stay-at-home parent once we have kids. That parent might be able to do some work, but they might not. So we're trying to both bulk up our savings and pay down our debt so that it will be possible to live on half or less of our current income.

[beastlike]

My wife and I are trying to do the same!

[Sick of Debt]

My wife "retired" from the 9-5 stuff at 28 when she had our first child. She still "works", but doing the stuff she wants to do (taking care of our rental income, caring for our child, laundry, food, etc.). We're planning on me joining her when I'm 42 (and 28 right now) by focusing on cutting expenses everywhere, getting rid of debts, saving everything we can, and growing our income streams. This weekend I'll be posting our 14 year plan to get to that point.

One item I found with the medical insurance dilemma is that you can withdraw from your IRA to take care of medical insurance premiums if you are unemployed (which we will be when we retire).

[Minimum Wage]

You gotta love the rental property gig. I once worked two jobs so that my landlord didn't have to work one job.

[jp]

My wife and I fell in love with British Columbia while on vacation and selected it as a potential early retirement destination. Not worrying about health insurance would certainly be a bonus.

[The Dividend Guy]

I think the days of the traditional "retirement" is changing. People do not want to check out at 55 (even 65 for that matter) and just not work. I think we will see a drastic change in how people retire and how they structure their lives. Companies can't afford to let the massive brain capital leave so being more flexible is going to be mandatory - contracts, summers off, more vacation, etc. This does not change the importance of financial planning, but I think there are going to be great money making opportunities for retirees in the near future that will only help to fund a more active "retirement".

[Manny]

Thanks for pointing me to such a great article. I think if you can get past the "keeping up with your peers" mania, you've got it made.

[Sammy]

This notion of retiring at 50/55/even 60 is madness for anyone but the mega-wealthy. Just plain idiotic to even consider. When people routinely live to 100, how can you spend half your life not working?? And be drawing on your investments for income...take a huge portion of that away for taxes (and remember that our tax burden will do nothing but go up-up-up as time goes by)...what about helping kids, your own parents, etc.? And remembering that pension plans go insolvent daily and that the government will be unable to give us ANY entitlements anymore, soon? It's foolish, people, incredibly foolish. Don't do it.

What if your spouse becomes disabled and one of you can no longer work? How are you going to pay for long-term care? Do you have long-term care insurance? Regular health insurance doesn't cover that.

What if ANYTHING unexpected happens? What if the non-disabled spouse gets laid-off? What if, what if? Doing something deliberately like retiring WAY WAY WAY too early is just stupidly setting yourself up for a possibility that ANY little bump will disrupt your plan and render your insolvent.

At the VERY least, except for the already-mega-rich, you WILL outlive your savings.