First Person: Is 50 the New 70?

Yahoo Contributor Network

I wouldn't mind retiring at age 50. Although, I know it's not as realistic for me as wealthy executives in the news, I have a plan in place to at least try to retire at 50.

According to a recent article by CNBC, Jack Ma, the CEO of the Alibaba Group recently stepped won from his job at the age of 48. On the older end of Generation X, Ma may have been experiencing what some call a mid-life professional crisis. A lot of us have experienced professional burnout, especially after living with the constant threat of layoffs during the Great Depression.

In my case, I can envision a time when I'm in my 50s when I may have to deal with a so-called "involuntary retirement." I know too many people who banked on working until their full retirement age, but had unexpected job loss, accident or illness.

Having money to cover the gaps

In order to retire at age 50, I have to have my finances in order. Since I can access various retirement accounts without penalty at different ages, I need to create a ladder that provides enough income for a certain number of years. I also need to eliminate all debt and lower my expenses. My first goal is to be mortgage free by age 50. I am already paying extra on my mortgage to accomplish that specific goal.

Covering the age 50 to 55 stage

Since I can't tap my 401(k) account without penalty until age 55, I still need enough money to carry me through to 55. I am buying exchange traded funds and stocks that pay dividends in a regular discount brokerage account. I am optimistic that the dividends will be large enough to provide income between the ages of 50 and 55. I'll still have to pay taxes on my investments, but I won't have to pay income tax if I'm not working.

Tapping my 401(k) at age 55

I won't be able to access my IRA accounts until I'm 59 ½ years old so I'll by relying on my 401(k) from age 55 to 59 ½. I am saving at least 6 percent of my income into a 401(k) so I can withdrawal money for four and a half years. By using my 401(k) for such a short window of time, I'm more confident about being able to retire early.

Making withdrawals from my IRA

At age 59 ½, I am assuming my 401(k) will be depleted. I can then begin to use money in my regular IRA account. I'll have to pay taxes as the money in the regular IRA is taxed the same as regular income. By withdrawing money from my regular IRA account first, I'll be able to delay receiving my Social Security money.

Saving the Roth IRA for last

My final step will be to begin collecting Social Security at my full retirement age. At the same time, I may begin to take money out of my Roth IRA. I won't owe any taxes on money that I take out of my Roth, which is why I saved it for last. With a Social Security check and money from my Roth IRA, I should be able to live comfortably until I die. I may not be the CEO of a big company, but I can still retire early by planning ahead.

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