How to Retire Early In Your 50s! (What FIRE Gets Wrong)
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- Опубликовано: 7 июл 2021
- How to Retire Early In Your 50s! (What FIRE Gets Wrong)
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The multiplier should be your annual expenses, not annual income. That can be very different.
Spot on.
Nice take
Amen
EXACTLY!!!!
You are right. And you have the go-go, slow-go, and no-go years. One does not spend $100,000 each year for 30 years. You are not going to spend much in your 80s.
Work optional status ASAP is our goal! Whether or not that’s “retirement” is TBD
Same!
Exactly it's not not retire....it's work when, what, how and if I want. I'm retiring at 54 next week!!
@@TheDjcarter1966 congrats. Have you made it? If so, how it's going so far?
My biggest part of my retirement plan is to move out of the US. That's mainly due to healthcare. While I have the money to live off of, my main goal is to live off my passive income and use my portfolio as a supplement. I'm in my early 50's as well.
My wife and I are doing the same thing, moving to Malaysia, buying a health care policy to cover any large expenses and paying out of pocket for basic, everyday care like colds, broken bones, etc. (Hopefully I don't have any broken bones)
I'm 50 and I'll be retiring at 52. The wife and I will be lucky enough to live off rental income from properties as well as interest and dividends from stocks and ETF's. We're also lucky enough to be able to allow our 401(k)s and retirement accounts to keep growing during that time. Instead of needing more money to have a comfortable lifestyle, we're moving to Malaysia from the US with a much lower cost of living. That will allow us the freedom to travel on that side of the world much more easily. Health insurance is another reason we're moving overseas. We can buy a policy that will cover any large medical expenses and put aside some money to use the low cost of healthcare in Malaysia to cover basic care. We're super excited and ready to begin our next journey!
Best thing to do
@@harismuzaffar1151 I actually retired in March of 2022 at 51 and the wife and I have been in Phuket, Thailand in a retirement visa for 6 months now. We crunched the numbers and decided to pull the trigger early. Best decision I’ve ever made.
@@KhakiShorts Def the best thing to do. Best age to take it easy. How have your etfs been doing? Dividends etc are good? I’m also thinking on getting into etfs n retire.
@@harismuzaffar1151 Dividends are ok but values have gotten hit just like the rest of the market. Luckily we don’t need to touch that pile for another year or two. We’re either on or below budget here so we’re all good. My MIL moved here with us and we all three live for less than $2k US each month including rent, food, entertainment, healthcare, etc.
@@KhakiShorts True that, for all going down these days but eventually I believe the values will start increasing again. It’s a cycle. Up and down is part of the game.
Debt free, mortgage free and retiring early. Most likely 55-58
Amazing take on F.I.R.E. 🙏
Cant wait for your next video! 💪
My wife and I are 46 with a 1.5M in Roth, 401k, 403b and a paid off house. We both also have state pensions, hoping to pull the trigger at 55, really would like to do it sooner.
With $1.5 million I'd pull it now.
Do it now! What are you waiting for? You have two taxpayer funded pensions and then you have Social Security later on. That’s all on top of the 1.5 million you have. Unless you really love your job, I say retire immediately.
@@me-lg1yw Can't start collecting pensions until age 55, we need to build a bridge fund hoping we can do that by 50.
Showoff
Start paying attention to your health now if you want to retire early. You want to be in top shape by 55 when you retire.
28x annual earnings is crazy. 28x annual expenses makes more sense to me.
Will retire at 55! Have a pension, 457b maxed out yearly, Roth IRA maxed yearly, PMs, and other assets i am slowly accumilating.
I Will Be Part Of That 1%
You do NOT need 29 times your income to retire at age 55. If you spend all your current income, then perhaps. But if you are able to retire at that age, you almost certainly are saving a high % of your income. I could see having assets of 30x your “after savings” income. Even that is very conservative I think, since the increase in health costs would be offset by a decrease in taxes, such as no FICA or Medicare taxes
We are shooting for 55. Great video!
I love the outro from this show
The retirement numbers are conservative. The assumptions are 1) you will live to 105 female is .002% and male .0002%, so chances are close to 0. 2) you want to leave inheritance 3) you want to live a wealthy life during retirement 4) not sure if these numbers take in compound interest of the $ you have not used. Inflation of 1 mil will be 2 mil, but your 1 mil could grow to 2 mil in 10 years also; fire uses 25-30 x expenses. So in FIRE terms this is Fat to Obese .
Go with Vanguard. Don't go with these guys. I have spoken with 3 different advisors at 3 different firms and each of them put me at a 95 percent or better retirement success rate and no I don't have 27-29 times my income put away and I am 41 years young. Seriously, grandma would never retire if she needed that. Yes social security comes later but most people living off investments will fill into a lower tax bracket, especially in non tax advantages accounts. And you can control what you decide to back door. Or don't back door at all if the economic isn't present. Keep bills low, pay off debt, and find the right mixer of investments. I just don't like how pie in the sky this is. At least the FIRE movement people tie it to expenses... But income... Is just too much. If these guys managed you they will never tell you it's ok to breath.
I retired at 57 after 32 years of teaching with no debts, paid off home, a DB pension, and personal investments . The key is hire a financial planner. Mine found ample money 💰 for my early retirement. Amen 🙏
Indeed,If you own your home outright with a 500k retirement account then yes you can retire in your early fifties.And oh my you will probably have 400 to 500k investment income that at the age of 62 because o compound interest.Big payday.Thats me.
Too often, these videos reference age over years. Retiring in my 50's if I am in my 40's takes a different path from someone in their 20's or 30's. I want to know how do I retire in 10/15/20 years, not in my 50's.
I agree but there's a workaround for that. Watch the episodes on how much you should have to retire at 65 and then look at 55/50/45 year olds to get those numbers. The closer you get to retirement the less risk you can take, so same numbers apply.
Needs $4 million when they are 55 years old to replace their income if they make 138K per year? It seems way too high.
At 3.5 withdrawal you'll pull 140k a year but never touch the principal. If you are okay with the base 4 million steadily decreasing until you die. Then yes, its too much. If you want to have a near zero chance of running out then 4 million for that estimated salary makes sense. What if you retire 55 and live to 105? Thats 50 years you need. Also don't forget the elephant in the room. "Inflation". 1 mill will be 2 mil in 10 years, 4 mill in 20 years, etc. If your still young 20s/30s and want to live a very comfortable retirement in 20 or 30 years, your going to need multiple millions to have security.
Because it is. You need 25-30X your EXPENSES. Your income doesn’t matter. It’s a terrible metric.
@@thomaswaters6283 they don’t need $140k per year.
1. Taxes are much much lower ie Roth
2. They were saving 20%+ of that in order to retire
3. Their mortgage is probably gone as well.
If one makes $140k but lives on $50k why do they need 4MM?
Spending ≠ Income, if it did they’d never retire
@@nathanhedglin931 Hopefully the mortgage is gone once you retire, but depending on which state you live in, you will have to pay income tax and you still have property taxes which can range from 8k to 60k a year (range is 2-4+% of your house assessment). Taxes will eat your retirement money real quick. The sudden boom in house prices has also increased property taxes.
@@jgeorge5820 $8-60k in property tax?! Get out of California! Sure if you MUST retire in an overpriced, over taxed state with a $2,000,000 house then you’re retirement planning is VERY different than mine.
My point is that $140k income says NOTHING about what you need in retirement. It’s a worthless metric.
IE I make $150k and spend $50k so I need only 1.25MM. But if you make $150k and spend $100k, then you’ll need 2.5 to retire. Income only affects WHEN you’ll retire but not how much you need.
Hi guys! Are those percentages (55 = 17,2 times your gross income when working) based on the replacement income coming from governement? because if it is not, I guess we are all "not able" to retire early :-(.... in Canada, it's a little different, but 17 times my gross is impossible to reach for me :-( Oh well, I guess I may have work longer!
Haven't completed the video yet--- but for the 17% who retire at 60 or younger, is the break-out within worth investigating?
How many of those are former police officers and fire fighters and such, who are retire in their 50s on average? IMO, separating out folks from industries where younger retirement ages are built into the payment structure might make a lot of sense here.
I’m a firefighter and we just have a regular 457 account like a 401K. Pensions are a thing of the past for us and it’s a young mans profession for sure. I’m just lucky that I started young enough to hopefully be able to retire before 60.
I've been investing diligently since my 20's, our income is tripling this year. We are targeting 6 million to retire with a better standard of living and investment balances that have hit the supercritical point. Hopefully in our early 50's.
We could do a more traditional FIRE before 45 but... we would rather continue working than cut back or face adversity if the market tanks hard.
I would love to see in 20-40 years if these people who "retired early" actually never had to work again...or they had to go back to work in their 70s or 80s due to economic conditions.
These numbers are definitely wrong, 30x income when we assume people need 60% of the income to live is 48x of expanse, that is about 2% withdrawal rate. I know there are tax involved, but that should be part of your expanse, and there are so many variables to tax strategy, early retiree can usually get away with paying very little tax unless your annual expanse is a lot more than 100k
How can you withdraw from your 401K account early (before 62.5 of age)? Doesn’t that incur fees and has tax implications? Are there any suggested investment options that will allow the retiree to start withdrawing early?
No you can start at 55 with no penalties as long as you then take the RMD every year starting at 55 (in another words don't stop)
59&1/2 is the age you can withdraw from a 401k or IRA without penalty… Most FIRE people use a brokerage account until access to retirement accounts.
Guys...update the video it's not income it's EXPENSES!!
I wish that health insurance worked like Auto Insurance for healthy people. Instead we have this ‘one size fits all’ system in many respects. I have built up my HSA and would love to purchase a super high deductible cheaper policy that just covers something catastrophic that god forbid might happen to me. The rest I would pay out of pocket from HSA. But we can’t have anything that makes sense in our society!
@chris Olivia Very true. I am in the boat looking to retire at 62 no pension, no medical until 65 Medicare. 😕
The issue is that if you so much as sneezed you couldn't get health insurance or you'd have to pay a lot for it. So the only time you could get health insurance is if you never use it, because if you do you'd be dropped. Even when you do pay for it you'd pay a lot because the company wants you to make up for the loss in revenue due to not providing coverage for everyone else. So you lose either way.
These numbers that reference 30x of salary should have a cap on salary such as it applies up until salary of 125-150k or something. More than that the number start getting a bit excessive.
Not only based on salary, but debt. If you have no debt and are investing a large portion of your salary as a result, then you don't really NEED to replace that much of it.
Keep your expenses at less or equal to 70% of your average salary over all of your working years. That's for a typical retirement after 35 working years.
If we're retiring at 65 I'm not planning for a 30 year retirement. Even if I'm somehow still alive at 95 with ever lengthening lifespans, by 85 my priorities will have shifted from making quality decisions and enjoying life to wondering whether I pooped myself. My carcass can just hang out on social security at that point. It's not as if I'll know where the hell I'm at by then anyway. Any money left in my portfolio should then go to family rather than drained away by doctors subjecting me to torture because I'm afraid to cross the threshold.
Hey Money guy! Im a super motivated individual that is only 36 yrs old. I do want to retire at 50. I need some advise on how can reach this goal. What advise can you give me?
first learn to spell simple grade school words, as in advice, or you won't get anywhere
No one wants to hire or buy from a person who is careless and ignorant, don't you agree?
Probably you want to say some needs 30x of yearly expenses not 30x of pre retirement income .. as for many the income could be more than the expenses ? That’s why people save from difference (earning Vs. Spending ) for retirement nest egg portfolio ..
You can be done early. Stay at home after a college for a few years. Wait with kids until 32 or later. House hack after living with parents. You’ll be able to save more than 50% of your income every pay period. Invest in high risk/high return assets and last but not least. Take care of your body so you can last.
If you live with your mom no woman will want to have kids with you. If you wait till 32, do you really want to sleep on the ground at age 47 when your kid camps in the boy scouts?
@@DrSchor man what are you talking about lol I said a FEW years after college. Assuming you graduate at 22. You can move out at age 25/26 into something that is reasonable. There are plenty of women out here that will wait to have kids. Just have to sit down and think what is important to you and stick with it. Retiring early or starting a family at what you deem the “right” age? Not every one wants kids in their 20s and not everyone wants to retire at 40. That’s what makes being human so great. We have choices.
Something is totally not adding up with the math here. When I was 40 I needed 29.4x to get an SWR at 2.75% and now that I'm 50 I need 28.9x at 3.25%. Without factoring taxes to get 60% of my gross income this is withdrawal rates of 2.04% at age 40 and 2.08% at age 50.
Example I earn 100k gross and want 60K in retirement. 60k/2.94 million is 2.04% and 60k/2.89 million is 2.08%. Even with some additional buffer these numbers don't make sense. What did that extra 0.5% SWR get me. I'm at 21.8x and 18.5x not accounting for taxes. These numbers you used are too close together.
I'm aiming to retire by 50. I'm 28, and I'm saving about 29% of my money each month. I should be on track to retire comfortably by age 50...but that doesn't calculate kids, marriage, buying a home, etc..
Paying cash for home and avoiding divorce and child support is very important.
@@razorsharplifestyle101hard9 Already been divorced (and lost about $40k), but thankfully no kids! Homes in my area average around $1.4million…so I doubt I’ll ever be able to pay cash.
Michigan is probably market you will consider paying cash for home because you still can find 250k homes on market.
Some of us have a SSA history starting well before our 20s. If I work until 65, I'll have over 50 years of earning history. That seems rather long... So maybe age is not the factor that determines early or not retirement.
I believe Social Security only uses your highest 35 years for calculating your benefit.
I was confused about the 60% before, but I think it makes sense now if they’re talking about your gross. After you subtract the taxes your normally pay, and you’ve grown accustomed to living with another 25% of that going into retirement, you should be accustomed to living on no more than about 60% of gross income.
Granted, I image most folks watching this (especially those intending on retiring early) are shoveling 15-20% or more of their gross into retirement savings which would stop.
@@ericrosen6626 yeah, everyone says that for FIRE people 60% is a lot, but I don't see it that way for me personally. I'm living like no one else now so later I can live and give like no one else. if my retirement requires me to live the way I'm living now... then what's the point?
Technically, yes I could retire and live the way I do now... but I don't want to. Financially, I want to enjoy retirement more than I enjoy the present. and that will require me to live on more than 15% of my income.
But absolutely, it could be done. I just can't imagine why anyone would force themselves to live an impoverished lifestyle just so that they could retire and continue to live a self-inflicted impoverished lifestyle. I'm sure all of the financial mutants out there want to retire early and then live life to the fullest. enjoy all the things they sacrificed while living on the extreme end of saving.
I see it now more like you do. 60% is the normal amount that FIRE people will finally be able to enjoy after they retire because the extreme saving will stop.
I wouldn’t look at gross income and multiplying it to figure out your retirement number. All that matters is your annual expenses, how much you have saved, and your withdrawal rate. Not what you were making while you were working. Imagine person one makes 100k person two makes 100k but one saves 20 percent and one saves 50 percent. The one who saves 50 percent has much smaller expenses and in turn needs much less in their nest egg
Please give us more of your obvious analysis points.
@@DrSchor you obviously didn’t watch the video, troll.
Many people retire in their 20s and 30s. You can see them in any homeless camp, living on your charity and taxes.
But they do contribute raw sewage and cigarette smoke.
If you have a pension in addition to your retirement savings, how do you factor your withdraw rate?
Subtract pension monthly, quarterly or yearly to reduce or offset the retirement savings withdrawal.
30 X gross? Or net?
More people could retire early if it weren't for the massive health premium costs. This is the biggest concern for most. We are in this boat where we live in a state that has extended medicare if you live below the poverty line when calculating your MAGI. But if you have any money in a bank or investment gains at all, you are not eligible for it. So that means to get on an ACA plan, we have to show a MAGI above the federal poverty level for married household of 2. Then we can get stipends on tax credits and pay 0 to very little for a silver plan or whatnot based on that MAGI. But you have to play that game where each year you have to try and stay below the MAGI you estimate when buying a plan in Nov/dec of each year. If you stay within it or below it.. great, if you go over you get hit with a big tax bill when you file the following year. Just a mess !
49 for me - next year.
I hate titles like this because it seems you don’t quite grasp what fire is about
I just have to laugh every time I hear financial planners say you need to have 30x your pre-retirement income in savings in order to retire. By that standard, a guy making $150K (not an unrealistic value these days) a year would need $4.5M to retire. That means the barely above average Joe would need to be in the 95th percentile in net worth before he could retire. Totally improbable. I quit working at age 54 and 'officially' retired at age 55. In the six years since I've doubled my net worth. How? By investing in real assets which throw off more cash flow than required to support my lifestyle. Capital gains on sale are just gravy on top. Financial security in retirement is less about the absolute dollar value of your assets and more about how much cash flow said assets throw off every year.
I don’t mind working SOME after I’m fifty. I just don’t want to HAVE to work after I’m 50
30x pre-retirement income seems too large a goal for most folks. That’s the goal for the standard retirement, not FIRE.
According to Fidelity to retire at 65 you should have 10x your last income saved, so yeah 30x is way too high.
@@BitsOfInterest 10x for most people is a million dollars or less. That just won't go far, especially when factoring in inflation. I guess if you want to live worse off after retirement but at that point, you probably weren't following the "if you will live like no one else, later you can live like no one else" mantra
There is a big difference between able to retire and actually retiring. I'm 52 and I'm able to retire, but I am not planning on retiring at this time. Not having a job to go to I would not know what to do with myself if I stopped working.
A few years ago, I broke my arm in a horseback riding accident ware my doctor would not let me return to work for months. By the time I was getting to the 13th week I was begging my doctor to let me go back to work because I was so F*ing board out of my scull that I wanted to return to work just to have something to do with myself.
Because of the way that my work schedule is and the number of the paid vacation days I have, I can take a great many short 7-day vacations every year (five regular days off and using two vacation days). So having lots of "me time" wail still working works great with me with me not retiring.
you could use your free time to study grade school spelling. Bored, where.
I will retire at 50 years young.
They are attempting to combine two common retirement benchmarks into one and they may have missed the mark.
The 4% rule which can also be restated as having saved 25 times your ANNUAL EXPENSES when you retire.
The Fidelity benchmarks of having saved 8x to 15x your GROSS INCOME when you retire.
For someone at fifty five, using their assumptions of 60% of gross income and a 3.5% withdrawal rate the calculation should have been 60%/3.5 which equals 17 times your gross income at retirement which is just above Fidelity’s 8x to 15x
So 100,000 * 28.9 = 2890000. Multiply this by 3.5% is 101,150. I thought we wanted a 60% replacement level not 100%. How to people account for the different income needs for pre-medicare and pre-social security. Your replacement need post social security might be quite different. Seems this just ignore social security entirely.
Will ss be around by then? Rather shoot high rather than have the bare minimum
Replace 60%? That’s crazy. I want to replace 100% due to healthcare costs. We don’t know where that’s going to go.
Look into Christian health ministries
The best part of not being an American is that you don’t have to worry about taxes.
You mean medical expenses.
It’s funny when they say most people reach millionaire status at 49. How?
Most people that start investing when they are 18, and going forward religiously.
If you start maxing out your 401(k) 15 years earlier you will get very close.
I understand the math. The question is how can “most” people get there by 49. When maybe 5% of the working people are maxing out their 401k every year...
@@elliotjames5172 that's not most people then. Maybe 5% of the population.
@@pasuchu7948 it's not most people, it's most people that are millionaires today got to their first million by age 49.
If you do what you love and love what you do, you shouldn’t be in such a hurry to retire,
"do what you love and love what you do" is redundant. who taught you to write?
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
these recommendations are very conservative, you would have to earn terrible returns every year and never receive social security to need this much!
Brutally basic and assumes the individual is a financial idiot that won't adapt to market conditions. % of your salary mean nothing. A person needs a realistic retirement budget and either choose the 3 bucket or barbell system.
Let’s be honest - for the VAST majority of us, retirement in your 50’s is not realistic unless you have fallen into a windfall of some type or are willing to live a fairly frugal existence. For those who want to have a similar lifestyle in retirement as they had during their working years, you’d best plan on plunking away at your day job until you hit 60 at the very least…..😐
Five more years, five more years, five more years…….😂
Or get out early for good behavior a.k.a= live below your means and invest the difference.
@@vanguardvaluist2614 i.e., not “aka.” I love the early release for good behavior.
Income withdrawal rates of 3% ??? You would have to eat McDonalds 3 times a day and live in a crappy $300 a month apartment !!!! wtf ! 60% replacement is a joke. It should be 120% replacement because of healthcare and assisted living is like $7,000 a month
you aren’t saving anymore.
@@michaelvan6675 What do you mean? I save 20%
@@jasona4853 I mean once you retire.
@@michaelvan6675 Save more than eating McDonalds. I could eat dogfood.
Not saving for retirement and you shouldn't have a mortgage by then
Who can save 30x your wage. These guys are so out of touch it’s un real. Pay off your bills. Retire with no dept. who are these clowns. I would love to show them my plan. Retired at 52.