5 Money Strategies to Help You Retire At 50


Photo by dborman2, used with Creative Commons License

Everybody has the dream that they’ll be able to retire early, travel the world and experience all the beauty that life has to offer. The fear for many is that they will have to work into their 70′s given the current ecomonic climate and modern social habits.

The reality is that you will probably fall somewhere in the middle. And with a little strategy and effort, there is every chance you could retire at 50 (or earlier!).

The good thing about retirement strategy is that it hasn’t really changed. What worked 20 years ago will still work today. The advantage is that we now live in a world of infinite opportunity – new companies to invest in, technology to work anywhere and make more money and a competitive savings market with a huge number of different ways to invest your money.

Ready to cut 20-odd years off your working career? Here we go…

  • Invest wisely. Savings for your retirement fund are precious. You may invest in some high risk/high reward stocks and shares with a portion of your savings, but retirement savings should be invested in steady, proven stock which has a modest return. Remember, you’re in this for the long term and you want an investment portfolio that is consisent and constant – especially if you want it to provide additional income throughout your retirement.
  • Multiply your income streams. My primary strategy for an early retirement is a diverse stream of income. I invest in ISA’s (the UK equivalent of a Roth IRA), I freelance in the evenings and at weekends, I build small and profitable websites and I even experiment with creating products like Kindle books to sell online. The result is a modest $2-3,000 a month in additional income which not only is invested into a retirement fund – it will also continue to pay me for many years.
  • Downsize your home. For many people, the mortgage is the biggest monthly expense they have. If you could happily thrive in a smaller home, consider downsizing and use the savings to significantly boost your 401k and/or IRA. Alternatively, you can remortgage your current home — a mortgage reduction of as little as 1% could save you $1,000 a year which can be invested for your early career exit!
  • Get help to manage your funds. All mutual funds offer investment advice on which funds to put your money into. Just be careful not to take their word as gospel and research on your own. You might also want to get expert advice on which funds from your 401k lineup to invest in. While I like to think of myself as a Jack of all trades, I’ve found that getting help from somebody who has already done what you want to do will multiply your chances of success!
  • Review your portfolio. Buying and holding stock can be a good strategy, but you have to actively review and monitor the performance to get the best out of them. Ignoring your stock and assuming “they’ll get a return eventually” is a recipe for disaster. Without a review, you won’t know whether your retirement fund would be better off if you invested elsewhere. I would recommend a quarterly review, but I personally keep an eye on my stocks on an almost daily basis. (I’m a bit obsessed with Google Finance!)

What strategies have you adopted to improve your retirement fund? I’m always curious to learn how others plan their portfolio so that I can improve my returns and earn more money too.

P.S. Take my words with a pinch of salt. I’m a novice investor, so this is not financial advice! All I know is that my retirement fund is increasing. How is yours doing?

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About Ian Nuttall

Ian is a finance blogger over at DebtConsUK who writes about all things personal finance. He also loves to make money and help people to make more as well. He's just joined Twitter, so follow him there if you want to read more.