How to Retire at Age 50

Mature Couple Having a Picnic

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Does retiring at age 50 sounds more like a pipe dream than a reality? Don't worry, it can happen! Can it happen easily? No, it can't. Will it require discipline and a good strategy? Yes, it will. Retiring at 50 can become real if you play by a few major rules.

Get "RIDD" of Going to Work

One way to put yourself on the path to retiring early is to figure out how all of your accumulated assets can produce some long-term residual/perpetual income. RIDD refers to Rent, Interest, Dividends, and Distributions:

Rent - Owning rental properties means that someone will be paying you rent. Rental income is a valuable stream of income. To earn a rental income you'll have to become a landlord.

Interest, Dividends, and Distributions - This includes interest from various types of bonds, dividends from stocks, and distributions from a variety of investments that don’t fit neatly into the stock or bond category. Depending on how your portfolio is weighted, an income-producing portfolio should be able to produce an annual “cash flow” in the 4 to 5% range. 

Income Investing

As a general rule, older retirees should plan on a 5% withdrawal rate, but younger retirees in their 50s should plan on only withdrawing about 4% per year. For example, if you have $1,000,000 in your investments, you will be able to withdraw $40,000 a year in gross income at a 4% withdrawal rate. Add this $40,000 to the stream of income from the rental properties, and you’ll be on your way to a nice yearly income, without even stepping into an office. 

Part-Time Work

To increase the income coming through your door, even more, you might consider some part-time work. If you’re trying to retire at 50, then you are still young and active. Consider taking a part-time position somewhere doing what you love or work in a consulting capacity. By having part-time work, not only will you be making extra money, but it will allow you to withdraw less from your nest egg.

No More Mortgage

If you’d like to retire early, you’ll want to find a way to keep expenses low. One great way to do this is to pay off your mortgage. That’s one hefty bill that you’ll no longer have to worry about every month.  


If you aren’t working anymore, look into a private policy to bridge the gap until you are eligible for Medicare at age 65. Whatever you do, don’t leave yourself exposed without a health care plan. 

Taxes, Savings, Life

Be sure that you have a balanced approach to how you are spending and saving your money. Remember the TSL strategy: taxes, savings, life. In general, 30% of your gross income will go to taxes, and 20% will go to savings, leaving you with 50% for your wants and needs.

Start Early

Retiring early requires a head start and saving early on. Be sure to contribute early to all of the retirement vehicles that are available to you including a 401k, IRAs, SEP IRAs, and after-tax brokerage accounts, to name a few. 


Last, but certainly not least, retiring early requires a tremendous amount of discipline. This may mean that you give up a few things now so that you can have a better life later. Every circumstance is different, but retiring at 50 won’t happen without a great strategy and self-control. 

Follow these rules, and you too can be able to retire earlier than you think. ​