It may actually be possible to retire in your 50's if you follow this strategy.

How can you afford to retire in your mid-50’s?

If you are not in love with the drudgery of your job, then read on.

It’s not easy, but surprisingly “getting out” could be more affordable than you think.

There are few key elements to make this happen in retirement.

The first is that when I say “retire” I mean getting out of the less than ideal job that you spend 250 days, 2,000 hours, 120,000 minutes a year while you still can. I’ve said many times, that if your goal is to “retire” then you should get out now. Whether you hate your commute, boss or work environment, quit whatever you are doing and seek a better job that provides you a happy way to spend your days.

You don’t need the money THAT badly.

Life is flying by and if you are in your fifties, you are starting to realize just how precious time is. Your parents have either passed away or have dramatically slowed down due to old age and you realize that your days of great health and vitality are numbered.

From a planning perspective, many people could afford to quit their current position as long as they found new work that paid them a decently (even if substantially less then their current income). If you are able to find work that gives you joy, why would you want to quit or retire? Ideally, you would WANT to keep working for many more years which is a big part of what makes this possible.

If you want this to happen, it helps dramatically is you do not have a mortgage payment. Many people are stuck in jobs they don’t love because of the bills they need to pay every month. Getting rid of your mortgage would be a great start.

Downsizing is the most viable strategy for most people unless you can afford to payoff your mortgage without moving.

That may not mean a smaller home, but possibly a home in a different town or different state. In Illinois, you can often move a few towns away and buy a similar size home for a fraction of the cost or a smaller home for much less money. By using the proceeds from you current home sale to pay for the less expensive home, you can be mortgage free. In the process, you will likely greatly reduce your property taxes. I can hear the “sigh” now, “wouldn’t that be nice” you say.

Many states are known for their low property taxes (IL has the highest in U.S.). So moving out-of-state, might allow you to buy a similar size home for a lot less money and much lower property taxes.

The 10 most tax-friendly states for retirees – MarketWatch

If you are without a mortgage and have low property taxes, what else is there to be concerned about?

Obviously, you want to minimize consumer debt and credit cards. Living debt free is a wonderful, peaceful way to go. Car payments need to be eliminated or minimized. Nowadays, most cars are able to go for 200,000 miles if you follow the maintenance schedule properly. You’ll also have your monthly utilities for your home, cell phone bill, insurance policies, spending money and groceries. This makes up your “basic living expenses”.

Once you have a handle on your total monthly basic overhead you can figure out what your family income needs to be to pay for everything.

If your monthly nut is $5,000 (remember NO mortgage) figure you need to earn about 25% more than that to account for income and FICA tax. So in this case $60,000 annually x 1.25= $75,000. You need to earn at least this much to make retiring in your mid 50’s possible.

In this simple calculation I assumed you were not saving any more money for retirement. If you desire a larger nest egg then make sure to add a monthly savings figure to this equation. Either way the money you have saved for retirement should be left alone to grow while you are providing the income needed to live on through wages.

For many people this plan will work if you can keep earning a paycheck until age 67 or wait even longer, then quit altogether and start collecting social security. So the idea is to work, doing something you like, and meets your desired commute, work environment, duties, etc. from your mid 50’s until your later 60’s when you can consider collecting social security and stop working if you so desire.

This idea is less viable for:

People with big mortgage and property taxes.
Depend on current income to pay for their children’s over-priced college.
People with an appetite to live large and spend a lot of money on clothes, trips, fancy cars, etc.

Frugal people make this happen every day. You can too.

I have clients that are doing this kind of math and when they see what it takes they are often amazed and wish they had looked into doing this sooner.

I suggest you run a more formal analysis than this, but hopefully you are inspired to do so.