Retire Early?

I recently discussed the idea of whether it’s better to retire early or work later. I think this is ultimately a pretty personal decision and there won’t really be a right answer. Everyone wants different things and certainly looks at work and retirement from a different point of view. That said, there a great number of folks who simply want to retire early.

The first issue nowadays is when exactly is it considered an early retirement. Clearly people are able to work longer and Social Security keeps getting pushed back further and further. The traditional retirement age of 65 now seems a bit early itself these days. Still, it’s pretty clear that anything prior to age 50 would be considered early by most any standard. So what do you have to do to retire by age 50?

Moneycentral wrote an interesting piece that featured a few examples of what it takes to retire by age 50. It’s no great surprise that it comes down to the basics: planning early, saving as much as you can, and cutting spending whenever it’s possible. If you make some clearcut plans early and benefit with the power of compounding, you’ve made a great beginning. The saving and spending part really goes without saying.

The interesting dilemma, for Americans at least, is that most of what it takes to retire early goes counter to just about everything we see around us everyday. People are spending like crazy, desperately trying to keep up with the Jones’, and almost always spending more than is coming in. Many (most?) people would simply scoff at the lifestyles and spending habits that are required to retire like the people mentioned in the article.

The issue, of course, runs much deeper than I’ve made it out to be. The US is a debtor nation, and of that there is no doubt. This goes for the government at large as well as the individuals that make up the country. The question for many years has been just how long can it last. We always seem to be just one step ahead of a train wreck, and as long as everyone keeps spending and using credit the machine keeps stumbling along.

But what of these thrifty folks, wisely saving in order to retire a bit early? Are they ultimately going to get screwed when the whole house of cards comes tumbling down, brought down by the reckless abandon of the spendthrifts addicted to credit?