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Can a 25-Year-Old Retire At 50?

by Flexo on September 14, 2005

in Uncategorized

That’s the question tackled by Walter Updegrave in his CNN Money column, Ask the Expert. Here are the given facts: the individual is 25 years old, contributes 10 percent to his 401(k) and maxes out his Roth IRA. Will that be enough to retire in twenty-five years?

Walter thinks he has a lot of work to do. By retiring early, he won’t be able to take advantage of social security or penalty-free retirement account withdrawals right away. Considering there’s a good chance today’s 25-year-old might live to 100, that is a long time — 50 years! — to be relying on investment income.

The Expert cites a rule of thumb: for every $1 of income desired in retirement, $25 in savings is required. (Another way to say that is the assumption of a 4 percent safe withdrawal rate.)

The article finishes with a short blurb about healthcare, a significant cost to consider. I get the slight feeling at this rate I’ll be working until I’m at least 75.

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Flexo, the owner and creator of Consumerism Commentary, has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow him on Twitter.

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  • I think everyone thinks that way when they are young, but the prime years for earning is in our 40s and 50s, so I think most people should be okay as long as they save enough than.
  • When I first read this person's question, I laughed. But after I thought about it, I figured he probably could retire, as long as he was doing other things besides saving. If he had a modest house that was paid for, and a low cost of living, he likely could retire as long as he keeps upping his savings and not increasing his monthly expenses.

    I think part of the problem with retirment savings is that many people spend a lot of their income pre-retirement and want to maintain that lifestyle, as well as travel, and that just isn't financially feasible for most.

    So, if you are saving a large portion of your money pre-retirement, then not only will you have more, but you will be accustomed to a more sustainable standard of living come retirement time.
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