Upticks: Can You Really Retire at 50?
By Jake Falcon on February 13, 2025
Jake and Cory say it’s possible to retire at 50. Like most things, you’ll need to plan for it. What are you going to do every day? Are your savings enough to fund your potentially 40-year retirement? Learn about accessing your funds before the typical retirement age and why health insurance costs might not be as daunting as you think. Plus, discover why you might not need to pay off all your debt before retiring. Jake and Cory share real-life scenarios and practical considerations if you’re considering early retirement.
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Read an overview of the conversation below:
The Importance of Purpose
One of the first points Jake emphasized was the importance of having a clear purpose post-retirement. He shared a story about a client who planned to retire at 51 and already had her next steps mapped out. “She judges gymnastics now, and that’s what she’ll do more of,” Jake explained. This highlights a crucial aspect of early retirement: knowing how you will spend your time. Without a plan, you might find yourself isolated, as most of your peers will still be working.
Cory echoed this sentiment, reflecting on his own situation. “If I think about retiring at 50, that’s 15 years from now for me. What would I be doing each day?” he pondered. The idea of having a purpose is not just about filling time but about maintaining a sense of identity and fulfillment. Jake added a personal anecdote about how defining his purpose helped him find his wife, Rachel. “A switch popped off, and I started thinking about the man I wanted to be,” he shared. This story underscores the broader point that purpose can guide significant life decisions, including retirement.
Financial Feasibility
Jake and Cory stressed the need for a solid financial plan. “You’ve got to make sure that your financial plan is feasible,” Jake said. This involves saving enough to sustain your lifestyle for potentially 40 years. Cory added, “If your goal is to retire at 50, the rate at which you’re going to need to save is going to be in excess of ordinary savings rates.”
They highlighted that retiring at 50 means you will be living off your savings for a longer period compared to those who retire at 65 or 70. This requires a more aggressive savings strategy. “Putting 3% in your 401(k) is probably not going to cut it,” Jake noted. “You’re going to have to turbocharge that sucker, max it out according to the IRS limits, and then dump tons of money into a brokerage account.”
Jake emphasized the importance of being realistic about your future expenses. “You can’t just say, ‘I’m going to cut my lifestyle in half,’ or ‘I’m going to live in a van down by the river.’ You need to be honest with yourself about what your retirement lifestyle will look like and plan accordingly,” he said.
Accessibility of Retirement Funds
Accessibility to your retirement funds is another important consideration. Jake and Cory discussed the importance of having access to your savings before you reach the age where you can withdraw from retirement accounts without penalties. “The IRS doesn’t let you tap into your 401(k) until you’re 59 and a half, or 55 if you leave your company’s plan and leave your company in that year,” Jake explained.
One option they discussed is the IRS rule 72T, which allows early access to retirement accounts under strict conditions. “You can access your retirement account prior to turning 59 and a half, but it’s very strict,” Jake said. Cory elaborated, “It involves figuring out the account balance, using the proper IRS calculations to determine what dollar amount you could pull out each year without penalty, and making sure the account is set up and structured properly.”
Jake emphasized the importance of working with a qualified wealth advisor to navigate these rules. “You don’t want to get it wrong because you could pay some serious penalties,” he warned. He also mentioned the concept of a bridge fund—a brokerage account that provides accessible funds before you can tap into your retirement accounts without penalties. “The people that do retire in their early fifties typically have a sizable brokerage that allows them to bridge that gap,” Jake noted.
Health Insurance Considerations
Health insurance is another critical factor. Cory shared a story about a client who retired in her late forties and managed her healthcare costs effectively through careful planning. “Healthcare can be a significant expense, but with proper planning, it can be managed,” Cory noted. Meeting with a health insurance agent to map out costs is important to incorporate these expenses into your financial plan.
Jake emphasized that while healthcare costs can be daunting, they are not insurmountable. “Some people think it’s going to be $4,000 a month, but that’s not always the case,” he said. The key is to understand your options and plan accordingly. This might involve exploring healthcare subsidies or other strategies to manage costs more effectively.
Managing Debt
Debt management is a nuanced topic for retirement planning. Jake and Cory discussed the difference between good and bad debt. “If your investments can average you more than that debt’s costing you, and that debt is attached to an appreciating asset, like a home, then you could be setting yourself up better,” Jake explained. However, they also acknowledged the emotional aspect of debt, with Cory emphasizing that “debt is a tool, not a lifestyle.”
Jake shared a story about a client who was unsure whether to pay off her low-interest mortgage or invest the money. “The math isn’t always clear-cut, but the general thought is that if your investments can outpace the cost of your debt, you might be better off investing,” he said. However, he also stressed the importance of understanding the emotional impact of debt. “Some people just want to be debt-free, and that’s okay as long as they understand the financial implications.”
Cory expanded on this by explaining that not all debt is created equal. “If somebody has a low-interest rate mortgage, that’s a whole lot different than having $50,000 on a revolving credit card that’s charging 25% interest,” he said. The key is to factor debt into your financial plan and understand how it impacts your cash flow and overall financial health.
Jake added that while some people have a strong aversion to debt, it’s important to consider the bigger picture. “You don’t necessarily need to be debt-free to retire at 50,” he said. “As long as your financial plan can support that debt obligation, you might be better off investing your money elsewhere.”
The Role of a Financial Advisor
Both Jake and Cory underscored the importance of working with a financial advisor. “Meet with somebody that’s done this before,” Jake said. A financial advisor can help you navigate the complexities of early retirement, from helping you plan to have enough savings to help you manage your investments and plan for healthcare costs.
Cory highlighted the value of personalized advice. “It’s not just about having a plan; it’s about having the right plan for your specific situation,” he said. For retiring early, this might involve strategies like building a bridge fund—a brokerage account that provides accessible funds before you can tap into your retirement accounts without penalties.
Personal Touch and Recommendations
Cory recommended the book “Madoff: The Final Word” and the TV show “Severance,” which explores the concept of work-life balance in a different way. Jake, on the other hand, gave an update about his hobby of learning to play the piano and his excitement for the upcoming golf season.
Conclusion
Retiring at 50 is possible, but it may require careful planning and consideration of various factors. From having a clear purpose to managing your finances and health insurance. As Jake and Cory highlighted, working with a financial advisor can help to ensure you are on the right path.
If you’re considering early retirement, start planning now. Whether you’re in your 20s, 30s, or 40s, the sooner you start, the better prepared you can be. And remember, it’s not just about having enough money; it’s about knowing how you will spend your time and having the right support and resources in place.
Thank you for tuning in, we hope you have a great week!
