Can I Retire at 50 With $1 Million?

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Want to retire early with a seven-figure nest egg? Keep reading to discover your playbook for accomplishing just that. 

The short answer is that it’s entirely possible to retire at age 50 with $1 million in savings. But the question of whether it’s possible for you might be another matter.

One of the most important concepts to learn about retirement planning is that it isn’t just about how much money you have in the bank — it’s how much income you’ll have to fund your lifestyle. And as an early retiree, you have the disadvantage that you can’t rely on Social Security, so unless you have any pensions, your income is going to come exclusively from your savings.

Most retirement planners use the 4% rule of retirement, which basically says you can withdraw as much as 4% from your savings in your first year of retirement and adjust it upward in subsequent years for cost-of-living increases, without much fear of running out of money. To be clear, this assumes your savings are invested in an age-appropriate portfolio, not simply sitting in cash in a savings account.

So, if you have $1 million to your name, the 4% rule says you can take out $40,000 per year in retirement. Now, you may be able to adjust this upward a little to account for the fact that you’ll eventually get Social Security, but I wouldn’t suggest going too much higher.

Can you comfortably and happily live on this level of income? If the answer is yes, retirement at 50 could be practical for you.

What do you need to do to retire at 50 with $1 million?

Once you’ve answered whether you’d be able to retire at age 50 with $1 million, the other big question is how you’re going to get to $1 million.

Of course, investment performance isn’t linear, but over the long run, an age-appropriate portfolio of stock- and bond-based investments should return somewhere in the neighborhood of 7% annualized returns over the long run. Using this return, here’s how much you’d need to save and invest each year in your brokerage account or retirement plan to reach $1 million by age 50 if you’re starting at certain ages.

The most important takeaway: The sooner you start, the easier it will be.

Now, this assumes you’re starting from zero, so if you already have retirement savings, you have a head start. But you can still use this as a guideline to determine how much you should be saving to reach $1 million by age 50.

Other questions you need to answer

As a final thought, keep in mind that this discussion has centered around the money you’ll have to live on to support your retirement, but other questions remain before you decide if early retirement is right for you. For example, what are you going to do about healthcare? Unless you’re one of the few lucky people whose job allows you to stay enrolled in their health plan after early retirement, you’ll need a plan for this – after all, you won’t be eligible for Medicare until you turn 65.

There’s also the question of what you will do after retiring at 50. Do you plan to live in an RV and travel around the U.S.? Spend your days volunteering your time for things you believe in? Whatever you do, have a plan. One study found that the average retiree is bored within one year of retirement, and if you retire at 50, you’ll hopefully have many years to fill.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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