I Want to Retire at 50, How Much Money Do I Need?

by on August 22, 2011

No matter how young you are it’s never too early to start planning for retirement.  For most of us, 50 years of age would be an ideal retirement age.  You’re still young enough to enjoy life and hopefully have a lot of time to do it.  So, how much money do you actually need to retire at 50?  Let’s look over the assumptions you need to make to arrive at your personal “retirement quote”.

First of all, you’ll need to cover all of your expenses each year.  You’ll probably be more active at the beginning of retirement than at the end, so you’ll probably need more money in the early years for travel, vacations, supporting your kids, etc.  However, in your later years you’ll likely need money for healthcare, which has been rising much faster than other expenses.  For our purposes, let’s assume equal annual withdrawals to simplify.  So, for our example, lets assume you live on $100,000 per year now but that you’ll need $120,000 per year during retirement.  Also, assume that social security will cover $25,000.  That means you’ll need to withdraw about $95,000 per year from your nest egg.

how much money do you need to retire at 50?Next, let’s figure out how fast your retirement savings will grow during retirement.  Hopefully you’ve been investing mostly in stocks and should be able to earn around 8-12% per year.  Okay, it hasn’t been that smooth for the past 10 years but this has been an anomoloy.  Let’s assume things become more “normal” and that during retirement you pare back your stock holdings to around 60% and that, with bonds and cash, you earn an average of 6% during retirement.

Now, let’s figure out how inflation will affect these returns.  Historically, inflation has averaged 2-4%, with cycles reaching as high as double digits.  For our generation, inflation will likely increase given the high levels of debt, deficits and money creation.  Also, your personal inflation rate may be higher if you consume high inflation goods like oil and healthcare.  For our purposes, lets assume inflation averages 3%.

The final piece in the retirement puzzle is the toughest.  How long do you think you’ll be retired?  In other words, how many years do you expect to live?  You can reference government life expectancy charts on this one, but for our purposes, let’s assume that you may live to 100.  And since you’re retiring at 50, you’ll need money for about 50 years.

Okay, so let’s enter all these assumptions into our retirement planning calculator spreadsheet….

The answer:

$2.5 million!

So, given the assumptions above, you’d need to save about $2.5 million dollars to retire at 50 with $95,000 per year in income from your retirement savings, at 6%, for 50 years, with 3% inflation.

If you’d like to do your own calculation, please download our free retirement worksheets:

If you don’t have Excel you can download free spreadsheet software at openoffice.org.

{ 16 comments… read them below or add one }

Brett March 5, 2012 at 7:12 am

Ouch, that’s a lot of money. I see now why so many people retire at 50 – even if they’ve just sold a really decent business they started.


Tim March 12, 2012 at 9:01 pm

Nice retirement calculator spreadsheet! I am hoping to retire by the time I’m 50 but I’m not quite sure I can save that much money. Because I have a pension that will cover a good portion of my living expenses, my number is just over a million dollars. However, I didn’t start saving until my mid thirties so I’m a bit behind.

Anyway, thanks for providing this free retirement calculator.


Louis March 13, 2012 at 2:36 am

If my money makes 8 to 12% as stated in the article and inflation runs at 3%, then with 2.5 million in the bank I am making on interest 125000 to 225000 dollars! and not touching the principle. Were did I go wrong?


Chris S March 13, 2012 at 9:33 am

Hi Louis,

I stated that investing in stock typically returns 8 to 12% but just below that I assumed that during retirement you would only invest part of your portfolio in stocks and that you would average a return of about 6%. 6% less inflation of 3% would yield 3% on $2.5 million, which is $75,000 per year. That means that with the other assumptions above you’d still need to pull out $20,000 from your savings in year one.

The beauty of this retirement calculator is that you can change all of the assumptions to figures that you believe are achievable. For example, if you invest conservatively and you believe stocks are going to return less for years to come, you could assume a return of only 3 or 4%. Because everyone’s investing style, income needs, and life expectancies are different, each person will have a different retirement plan.

Tools like these are a good way to get an idea of how much money you’ll need to retire, but they are only one of many tools. Make sure you also use rules of thumb like the 4% rule and try several other retirement calculators to help calculate your number. That way you can create a large range of figures to see all of the different possibilities.


Jack Bacon April 28, 2013 at 1:22 pm

You forgot SS as early as 62 should put another $20K plus in the sum. If your house is paid for you’re in even better shape.


Dan J. March 13, 2012 at 10:38 pm

I love this retirement calculator spreadsheet! Some tips on how to use it are to really play around with the assumptions. For example, make an estimate of how much you need to retire if you earn ten percent and five percent on your investments. Also, assume you will live to be 70 and 100.

Complete the retirement calculator with all of the conservative assumptions and then all of the more aggresive assumptions and get a range. Retirement is not really about a specific number, but more about understanding what the numbers mean.
Dan J. recently posted..Retirement Planning AdviceMy Profile


dan June 12, 2012 at 11:07 pm

retirement seems so far away but will be here sooner that you think. My parents are worth about that but they retired in their 60s. Mostly real estate not stock market. Home Rentals are still good income if you own them out right.
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pocs September 2, 2012 at 9:21 am

Wow, there is mo chance for me to retire early. For this that what to achieve a early retirement your spreadsheet should tell the story for them. Assumptions and interests leading the way. The one thing that spoke volumes to me in your article “you’re never to young to start planning for your retirement “. This is so true and the young people out there who feel untouchable and old age is to far off to worry about it, take warning. This is the best tip you can offer. I wish I would have started planning when I first hit the work place.


Matie September 10, 2012 at 12:34 pm

I don’t know but I don’t believe at all in retiring at 50. There are social and generational changes occurring globally that indicate that people in their 50’s can still be highly functional people contributing to the workforce, and with plenty of projects and life ahead.


Liz September 19, 2012 at 1:41 pm

I believe that now adays retiring means more diong what you want not what you have to in order to survive. So, in retirement, you aren’t just sitting on your butt doing nothing and spending money, your contributing in lots of ways you couldn’t when you worked full time and were saving all the money you needed to retire.


pedro January 6, 2013 at 12:38 am

How do you figure that someone who is fifty will be able to receive SS? You are off by 25K on you annual income calculation


Nia April 26, 2013 at 1:58 am

I think that we can not predict how much money people need on their retirement It’s depends on what they have planed after the retirement and now the time has changed on one wants to retire early.


Shirl July 23, 2013 at 12:17 am

The cost of living is forever rising and it’s not going to stop so it is a big concern for most people. I can understand why people move to other countries when they retire for more affordable living
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Chad September 26, 2013 at 1:08 am

That’s a nice and creative calculator and analysis. I think it’d would be better if you will invest in a small business or part time job when you are retired. There are still many business or job opportunities for retired individual, especially on this day of information technology. Putting up a simple blog and gaining a significant number of loyal readers can put up earnings around $50 – $500 each month.
Chad recently posted..Protect Your Retirement From Financial SurprisesMy Profile


Bill October 19, 2013 at 1:52 pm

It is always good to see people that are preparing for retirement, as you said you are never too young to prepare. I think retirement means so many different things to different people, some people want to do more in retirement than they do in their current lives, and some people want to do less. While spreadsheets and calculations are great for planning, there is nothing like trying it out before you quit your job to see if you can really live off of what you are planning for. It is probably better to have too much money than not enough, but there is a fine line between wasting years at work that could be better spent building relationships with your spouse and children.

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chris November 10, 2013 at 10:30 pm

retirement seems so far away but will be here sooner that you think. My parents are worth about that but they retired in their 60s. Mostly real estate not stock market. Home Rentals are still good income if you own them out right.


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