5 Ways to Retire With $5 Million by Age 55

Here at Physician on FIRE, I like to help people figure out how they can set themselves up to not only retire early, but to also retire well. Five million dollars should do the trick, even considering this current bout of inflation.

How does age 55 sound for an early retirement age? Yes, there are people out there who have retired by 45, 35, and younger, but you do need some time to amass that big nest egg.

A 55-year old can expect to live an average of 26 (male) to 29 (female) more years, according to the Social Security Administration’s actuarial tables. But you’re above average, right? I’d say you could easily have 3 to 4 decades to enjoy that money.

5 Ways to Retire With $5 Million by Age 55

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Let’s say you finish high school at 18 and graduate from college at 22 with a degree that will help you land a good job. In college, you met someone who followed a similar path.

#1 Slow and Steady Wins the Race

The two of you understand what compound interest can do for your finances, so you start setting aside money as soon as you get your first real paycheck. Living like a student until you’ve saved enough for a ring, a down payment on a house, etc…, you and your partner prioritize paying yourselves first.

How much would you have to set aside per month to have $5 Million in retirement savings by age 55? For simplicity’s sake, let’s assume a constant and steady amount saved with steady returns, as well.

A few other assumptions: investment returns are a reasonable 6%, with low-cost index funds, investment fees average 0.1%, and overall tax drag on the portfolio is 0.25% since some of the investments will likely be held outside of tax-advantaged retirement accounts.

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