Retiring with a million dollars is an aspirational financial goal of many. It represents freedom, flexibility, and the opportunity to shape your life on your terms. Whether you dream of exploring the world, dedicating time to personal projects, or simply enjoying the peace of financial independence, reaching this milestone sets the stage for a fulfilling next chapter. However, an important question arises: “At what age should you have $1 million in retirement?”
For many, the age of 50 is a benchmark that combines the financial freedom of a solid retirement fund with the youth and health to enjoy it fully. Reaching this goal at 50 requires you to save diligently with a sense of urgency and purpose. This early retirement timeline means compressing decades of traditional retirement planning into a shorter, more aggressive approach that maximizes growth while managing risk. The earlier you aim for this milestone, the more disciplined your financial strategy must be.
Achieving such a goal requires a well-thought-out plan, disciplined execution, and a long-term commitment to smart financial habits. Starting early gives you the advantage of time, allowing compound interest to work its magic, while consistent saving and strategic investing amplify your wealth-building efforts. A financial advisor can help create a personalized retirement plan to save a million dollars in retirement savings at age 50.
This article discusses essential steps to help build a million-dollar nest egg by age 50. From setting financial milestones to crafting sustainable strategies for early retirement, we’ll cover everything you need to pursue this ambitious yet achievable goal.
Below are some of the key strategies you can adopt to save $1 million by age 50:
1. Start saving early and leverage compound interest
The earlier you start saving, the greater the impact of compound interest. For example, saving $500 a month starting at age 25, with a 7% annual return, could grow to over $1 million by 50. Delaying savings means needing to contribute significantly more to reach the same goal. A successful retirement strategy can be built by starting early, saving consistently, and allowing time to magnify your efforts.
2. Maximize retirement account contributions
Retirement accounts such as 401(k)s and IRAs are foundational plans for building long-term wealth. They offer unique tax advantages—either tax-deferred growth in traditional accounts or tax-free growth in Roth accounts. These tax advantages allow your investments to compound more effectively over time. To maximize these benefits, aim to contribute the maximum allowed each year. For 401(k)s, this limit is $23,500 as of 2024, with an additional $7,500 in catch-up contributions for those aged 50 and older. Similarly, IRA contributions are capped at $7,000 annually, with a $1,000 catch-up provision for individuals 50 and over.
If your employer offers matching contributions for your 401(k), take full advantage of this “free money” by contributing at least enough to receive the full match. Over time, the combination of personal contributions, employer matches, and compound interest can create a substantial retirement fund.
3. Balance growth and risk by diversifying investments
An effective investment strategy is key to maximizing returns while managing risk, especially when saving for retirement. A higher risk tolerance often means a portfolio weighted more heavily toward stocks, which historically deliver higher returns over the long term. This growth-oriented approach allows your investments to build momentum during the wealth accumulation phase.
As you approach retirement, preserving the wealth you’ve built becomes essential by reducing exposure to market volatility. Gradually shifting your portfolio allocation toward bonds and other more stable assets can help protect your savings while providing a steady income stream. Diversification across asset classes, such as stocks, bonds, real estate, and index funds, further minimizes risk by spreading it across different types of investments.
Regularly reviewing and rebalancing your portfolio ensures it remains aligned with your financial goals, risk tolerance, and changing market conditions. By following this proactive approach, you can optimize returns without taking on unnecessary risks and move toward your retirement objectives in a balanced way.
4. Manage lifestyle inflation to save more
As your income increases, it’s easy to fall into the trap of lifestyle inflation, which means spending more simply because you earn more. You can avoid this by directing raises, bonuses, or unexpected windfalls into your savings and investments. Living within your means and prioritizing savings over unnecessary spending is an effective way to stay on track toward your retirement goal.
5. Don’t overlook Social Security
While retiring at 50 often means delaying access to Social Security benefits, this program should still play a role in your long-term financial planning. Social Security benefits can begin as early as age 62, but claiming them before your full retirement age (67 for most) reduces monthly payments. Conversely, waiting until age 70 increases your benefit amount significantly.
For early retirees, planning how and when to claim Social Security can help complement your existing savings. Since you won’t have access to these benefits until later, your financial strategy should focus on bridging the income gap during the interim years. This may involve relying on investment withdrawals, rental income, or part-time work.
6. Plan for healthcare costs in retirement
Healthcare is one of the most significant expenses you’ll face in retirement, especially if you’re retiring early. Apart from covering the basics, it’s about preparing for routine and unexpected medical needs. Monthly premiums for private insurance or spousal plans, out-of-pocket costs like deductibles and co-pays, and services such as vision, dental, and hearing care all add up quickly. Then there are the unpredictable costs, like medical emergencies or long-term care, that can throw even the most solid financial plan off track.
In addition, healthcare costs don’t stay static. They tend to rise over time, driven by inflation and the natural changes that come with aging. To stay ahead, it’s smart to factor in an annual inflation rate of 4-6% for healthcare in your financial plan. Setting aside a contingency fund can help you handle those unexpected expenses without draining your savings.
SPONSORED WISERADVISOR
Need a financial advisor? Compare vetted advisors matched to your specific requirements.
Choosing the right financial advisor is daunting, especially when there are thousands of financial advisors near you. We make it easy by matching you to vetted advisors that meet your unique needs. Matched advisors are all registered with FINRA/SEC. Click to compare vetted advisors now.
7. Bridge the healthcare gap till the time Medicare kicks in
For those planning to retire at 50, ensuring continuous healthcare coverage until Medicare begins at age 65 is critical. This 15-year gap demands strategic planning, as healthcare costs can quickly become one of the largest expenses in early retirement. Without proper preparation, these expenses can erode your savings and jeopardize your financial stability. Here are some of the ways to arrange for healthcare before Medicare kicks in:
a. Purchase private health insurance
Private health insurance is often the most straightforward option for early retirees but can be expensive. Premiums vary based on factors such as age, location, and the level of coverage you choose. Early retirees should explore plans available on the Affordable Care Act (ACA) marketplace or through private insurance providers. If your income in retirement is low enough, you may qualify for subsidies under the ACA, which can help reduce costs.
When evaluating healthcare options for early retirement, carefully compare insurance plans to strike the right balance between premiums, deductibles, and out-of-pocket maximums. Ensure the plan includes essential services such as prescription coverage, specialist visits, and preventative care to meet your healthcare needs. Additionally, account for the likelihood of rising premiums as you age, and factor these increasing costs into your long-term financial plan to avoid surprises.
b. Use your spouse’s employer-sponsored health plan
If your spouse is still working and has access to an employer-sponsored health insurance plan, joining their plan can be a cost-effective solution. Many employers allow spouses to be added to health insurance policies, although this may come with additional premiums. This option can provide comprehensive coverage at a lower cost compared to private insurance.
c. Open a Health Savings Account (HSA)
A Health Savings Account (HSA) is a powerful tool for managing healthcare expenses in retirement. HSAs allow you to save money tax-free, invest those funds, and withdraw them tax-free for qualified medical expenses. For 2025, the maximum HSA contribution amounts are $4,300 for individual coverage and $8,550 for family coverage. You can also make a catch-up contribution of $1,000 if you’re 55 or older. By contributing to an HSA during your working years, you can build a substantial fund to cover healthcare costs during the gap years before Medicare.
8. Carefully devise your withdrawal strategy for a sustainable income
A sustainable withdrawal strategy is as important for a financially secure retirement as your investment strategy, particularly when retiring early. The widely-used 4% rule suggests withdrawing 4% of your portfolio annually, which would provide $40,000 per year from a $1 million nest egg. While this guideline offers a starting point, it’s not a one-size-fits-all solution and may need adjustment based on various factors:
- Market performance: Market downturns, particularly in the early years of retirement, can significantly impact the longevity of your savings. Adopting a flexible withdrawal strategy, such as reducing withdrawals during bear markets, helps preserve your portfolio.
- Unexpected expenses: Healthcare emergencies, home repairs, or other unforeseen costs can strain your savings. Having an emergency fund or a buffer within your portfolio helps manage these surprises without derailing your plan.
- Retirement timeline: Retiring at 50 requires planning for withdrawals over potentially 30-40 years. Adjusting your withdrawal rate periodically to account for changing expenses or market conditions ensures your savings last throughout retirement.
9. Address inflation and longevity risks
Inflation is one of the most significant threats to the purchasing power of your retirement savings, especially over the decades-long timeline of early retirement. For example, at a 3% annual inflation rate, expenses could double in 24 years. This requires careful planning to maintain your standard of living.
- Budget for inflation: Incorporate inflation-adjusted estimates into your retirement budget to ensure your withdrawals and spending can keep pace with rising costs over time.
- Focus on growth-oriented investments: While it’s important to reduce risk as you approach and enter retirement, maintaining a portion of your portfolio in growth-oriented investments like stocks helps combat inflation. A balanced approach, combining stable assets with growth potential, provides long-term sustainability.
Longevity is another important factor to consider. Retiring at 50 means planning for the possibility of living into your 80s or 90s. To avoid outliving your savings:
- Use conservative estimates for your withdrawal rates and spending.
- Reassess your financial plan periodically to ensure it aligns with your actual needs and market conditions.
- Consider products like annuities, which provide guaranteed income for life, as part of a diversified retirement strategy.
Additional tips for financial success
a. Work with a financial advisor to customize your strategy
A financial advisor can help tailor your retirement plan to your specific goals and circumstances. They can provide insights into optimizing tax strategies, managing risk, and adjusting your investment approach as retirement approaches.
b. Stay flexible and informed about economic changes
Economic conditions can shift unexpectedly, impacting everything from investment returns to healthcare costs. Staying informed and willing to adjust your plan ensures you’re prepared for opportunities and challenges. Regularly reviewing your financial plan keeps it aligned with the current economic scenario.
c. Explore part-time work or monetized hobbies post-retirement
Even in early retirement, generating supplemental income can provide financial flexibility and reduce pressure on your savings. Part-time work, consulting, or monetizing hobbies boosts your income and adds purpose and fulfillment to your retirement years.
To conclude
Retiring at 50 with $1 million may seem ambitious, but it is achievable with disciplined planning, consistent savings, and smart financial decisions. Addressing key considerations like healthcare, inflation, and sustainable withdrawal strategies ensures that your savings will support you through a long and fulfilling retirement. A qualified advisor can help tailor a plan to your unique circumstances, ensuring that your investments, savings, and spending align with your goals. They can provide insights into optimizing tax strategies, managing risk, and preparing for unexpected challenges, like rising healthcare costs or market downturns.
Use the free advisor match tool to get matched with experienced financial advisors who can guide you on how to build a million-dollar retirement corpus by age 50. Answer a few simple questions and get matched with 2 to 3 vetted financial advisors based on your requirements.