$5 Million at 50-Something: Rich Enough to Retire, or Just Scared?”

While the full retirement age for Americans is 67, many savers find themselves dreaming of retiring early. Making that dream into a reality is easier said than done, considering the percentage of Americans who are able to pull off an early retirement has been declining over the past 20 years. Retirements for the 50-54 age bracket have decreased from 9% to 6%, and for those aged 55-59, the figure has fallen from 19% to 11%, according to Guardian Life Insurance Company.

We came across a Reddit post from a couple who were looking to do just that—retire in their early 50s. With a net worth of $5 million, or $4.4 million excluding their home equity, this couple had amassed significant savings. Nevertheless, as a one-income household, they were losing sleep over whether they were actually ready to cut the cord and retire or if they should bite the bullet and keep saving.

With $4.2 million of their nest egg accessible for retirement and the balance set aside to finance their only child’s college education, the couple is well on their way to a comfortable retirement. And they could probably pull off the early retirement they desire if they maintain a conservative approach to money management. But they don’t have to pigeonhole themselves into just these two options—early retirement or greater savings—and might want to consider other possibilities.

You Can Retire Now…

Let’s not sugarcoat it – retiring in your early 50s comes with its own set of drawbacks. Chief among the negatives is that you are not yet eligible to access the Social Security benefits you have earned until you reach the ripe age of 62. That would have been a nice income stream to rely on if an emergency came up, but you’ve saved plenty for now. Fortunately, this Redditor described himself and his wife in good health with plans to stay active through travel for the next decade.

They need to stay healthy so they won’t have to spend a large portion of their retirement savings on healthcare. Early retirement means they won’t have access to Medicare until they reach their mid-60s, which could throw a wrench into their plans if they’re not careful. Without his six-figure salary, our Redditor most likely will have to pay for the family’s healthcare out of his own pocket. That is the biggest threat to running out of savings, but it’s the worst-case scenario.

The reality is that at over $4 million at their fingertips, this couple has built a substantial nest egg, one that should be sufficient to carry them through their golden years. But with the average life expectancy at approximately 77.5 years old and rising, they’ve got a few more decades of living to do yet. So they will want to implement a prudent withdrawal strategy.

Rather than letting the $4.2 million sit, this couple could direct the funds into liquid investments for capital preservation and potential growth. Even if they withdrew just 3% of that annually, they’d have $125,000 per year from their investments. While that’s less than the Redditor’s current salary of $430,000, it could still allow them to maintain their lifestyle. Their home is fully paid for, while the annual property tax and insurance bill tally comes to $6,000, according to the Reddit post. As empty nesters, they might even consider relocating to an area with a lower cost of living.

…But You Have Other Options

While retiring in your 50s is possible, you might want to ask yourself why you want to rush the process. Stress is an understandable reason, and while our Redditor has described the stress level as manageable, he’s also shared that the amount of travel involved disrupts his daily routine and desired lifestyle. In this case, he might want to consider changing jobs—even if it means taking a pay cut—to help him find a better work-life balance.

Even if he were to earn one-third of his current salary, that’s approximately $143,333 per year. Those checks would keep coming so that he doesn’t have to dip into his retirement savings so soon. If the new employer were to cover healthcare benefits, that would be a major perk that would keep his expenses low for a few more years.

Before making any major decision, we advise this Redditor to speak with his financial advisor to discuss his unique situation and explore all available options. It’s very possible that the early retirement idea came from a place of weariness, and there might be another solution that would leave his retirement savings untouched for a little while longer.

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