How to Retire at Age 50

As a teacher, I really enjoy my job. It allows me to help shape the lives of countless teenagers. It also helps to keep me young as I learn about the thoughts, hopes, and dreams of teenagers.

Although I enjoy my job, I don’t want to be forced to work forever.

In other words, I want to have the option of retiring early. Perhaps this means that I’ll do part time work or maybe I’ll actually stop working completely. Maybe I’ll even continue to work full time. But no matter what, I want to have the option of leaving full time employment by the time I am 50 years old.

By the way, we also want my wife to have the option to retire at age 50 as well.

We are still quite a few years away from our possible early retirement, but it seems like we are on the right track. Even though we won’t be retiring at age 30 or even 40 like many other early retirement proponents are doing, we are still pretty excited to have the opportunity to retire so much earlier than the “typical” age of 65 or 67.

So how will we be able to retire at age 50? Let’s take a look at 4 things that will allow us to do this.

We don’t have car payments

When I was 21 years old, I purchased a new car and had a car payment of $342 per month. Although I didn’t really know what I was doing with money back then, I still realized that it didn’t make much sense to have a car payment. So my wife and I worked real hard to pay the car off early.

Now, instead of having car payments, we buy used cars that we can afford.

Typically, we go on a site like Craigslist or Facebook Marketplace and buy our cars from an individual or a small dealership. We’ve bought cars that have clean titles and cars that have salvage titles, but no matter what, we always buy affordable cars with cash.

So how will paying cash for our cars help us to retire at age 50? Let’s say that we took the, relatively small, $342 per month car payment and invested it for 30 years instead of sending it to a car company. This one simple investment will be worth $482,000 after 30 years.

If you want to figure out how to break the cycle of car debt, just check out this article.

We don’t pay large investment fees

Several years ago, I was trying to figure out where to invest money in my 403(b) retirement plan. I had already spoken to the retirement plan specialist at my work who talked to me about annuities. After I explained to her that I would rather invest in mutual funds instead of annuities, she brought in another “specialist” who tried to sell loaded mutual funds to me.

The basic premise of a loaded mutual fund is that you pay a certain percentage of your money up front as a sales charge and then a smaller annual expense ratio. Typically, the upfront fee is around 5% and the annual expense ratio is around 0.7%.

Fortunately, I didn’t buy loaded mutual funds from the retirement specialist. However, I also take it one step further and don’t even buy no-load mutual funds, which have expense ratios of around 1%.

Instead of buying loaded or no-load mutual funds, we just buy simple index funds with low annual expense ratios.

Although it may seem counterintuitive, a passively managed index fund will often have better returns than an actively managed fund. Many index funds also have annual expense ratios of 0.04% or even lower.

Paying a fee of 0.04% instead of 1% on our retirement investments can save $200,000 or more by the time of retirement.

We question our big expenses

Nine years ago, we purchased a huge, 4,600 square foot house. It had an in-ground pool, a finished basement, and a 5 car garage. At the time, this house was our dream house. It was even fairly affordable because of the housing market crash here in Michigan.

We absolutely loved our house.

However, this house also came with a lot of work. There were 5-6 acres of grass to mow, 6 bathrooms to clean, and a pool that always seemed to be breaking. Although we were living in our “dream house,” our dream came with a ton of work that didn’t necessarily make us happy.

Even though this was supposed to be our forever home, we decided to question that assumption.

What would it be like if we lived in a smaller house? We knew that we would miss the pool and the huge yard in front of the house. However, we also knew that we would probably be happier as we spent more time together as a family.

We didn’t rely on a decision that we made several years ago to determine if we should keep the house or not. Instead, we questioned our huge expenses and realized that one of them was not helping to add to our happiness.

Therefore, we decided to sell the house.

We got out of debt

If anyone wants to retire at age 50, it is absolutely imperative that they get rid of all of their debt first. Paying $500 a month towards student loans, credit cards, or car loans makes it significantly harder to retire.

Therefore, in 2011, we embarked on the journey of getting out of debt. Since we had $442,500 in debt, we couldn’t passively try to wander away from our debt. Instead, we decided to get completely radical. We sold stuff, worked extra, and questioned all of our expenses. Every single extra dollar that we managed to find went towards our debt.

We didn’t sacrifice the quality of our lives, but still worked extremely hard to eliminate all of our debts.

Currently, we still have a bit over $35,000 left in mortgage debt. This means that we have been able to eliminate over $400,000 worth of debt from our lives! This also means that every dollar we make can go towards something positive instead of just going to pay off debt that we accrued many years ago.

As I said, we definitely worked really hard to get out of debt, which will give us the option to retire at age 50. If you want to see how you can get out of debt, check out this great article that I wrote. This article talks about determining your “why” and creating visual reminders to get out of debt. It also talks about creating a philosophy about debt and celebrating the wins along the way.

Getting out of debt is a must on your path to early retirement.

4 things

So as you can see, you don’t need to do anything radical to retire by age 50. We are shaving 15 years off of the typical career just by doing 4 simple things.

Eliminating car payments. It doesn’t make any sense to keep going into debt to purchase a car. Just buy something that you can afford and pay cash for it.

Avoiding investment fees. Why give tens of thousands of dollars to an investment broker when you can purchase investments that are just as good or even better for less.

Questioning big expenses. Is that house making you happy? Do you use that boat more than 5 times per year? Do you really love that huge SUV? Maybe the answer to all of these questions is yes. But we have to make sure that we always ask the question, “Does this make me happy?”

Getting out of debt. If you are in debt, you can’t wander your way out of it. Instead, you have to get fierce, radical, and even angry at your debt. If it is a priority to get out of debt, then it will happen.

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Are you planning to retire early? How early? Share your secrets in the comments below.

And thanks for reading!

~Nathan

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Let’s keep living a great life … with the help of money. So what’s next?

• You can travel for free by using rewards credit cards.
• You can get motivated and get out of debt.
• You can check out the next post or the previous post and continue to learn.

But no matter what you decide to do, let’s leave the ordinary behind and take action today!