If you want to say goodbye to the working world by the time you turn 50, you need money -- a lot of money. The core challenge is the same as any other early retirement: You have fewer working years to build your nest egg and more time to spend on it. While you don't need to be an oil baron or a millionaire's offspring to retire at 50, here's what you do need: an extra-disciplined approach to saving and spending, a clear view of the obstacles you'll face, a lot of planning, and a little faith.
First, let's do a little back-of-the-napkin math to figure out how much money you'll need. According to the Centers for Disease Control and Prevention, a resident of the United States can expect to live to about 78 years old [source: CDC]. Many financial advisors recommend budgeting to spend at least 70 to 80 percent of your annual pre-retirement income to keep your standard of living. If you live off of $60,000 a year while you're working, that means you'll need between $42,000 and $48,000 a year during retirement. So, if you live until age 78, you'll need to have assets valued between $1.18 million and $1.34 million.
But finding the true number is much more complicated. Inflation has a huge impact on your retirement budget: According to the Bureau of Labor Statistics, a person who lived on $48,000 in 1991 would need nearly $80,000 to have the same buying power just 20 years later [source: Bureau of Labor Statistics]. There are also healthcare expenses, which have risen faster than inflation over the last 20 years [source: Department of Labor]. You'll most likely need to purchase private insurance to cover your health until you're eligible for Medicare, and don't expect to stop paying when you reach 65: According to a 2010 study, a 65-year-old married couple without chronic conditions can expect to pay $197,000 out-of-pocket during their retirement [source: Brandon].
The amount you need to retire also depends on your individual circumstances and retirement goals. Do you have children? Do you have debt? Are you planning to enjoy the luxurious fruits of your labor, or will you retire in austerity? The magic amount you'll need to retire can vary widely depending on your answers to these questions, and you'll probably want to speak with a financial advisor to get a better guess.
Let's look at how to go about saving and investing for a retirement at age 50.