How To Retire With A Million In 10 Years And Live Off Dividends

Summary

If you are 50 or older and haven’t done retirement planning, there’s no better time to do this than now. In fact, it’s never too early.

We demonstrate how to plan, save, and grow your capital to retire in 10 years.

We ran multiple simulations for our hypothetical couple to show how they could grow modest savings into a significant sum that can last them for a lifetime.

Lastly, we provide a simplified model portfolio to grow the capital safely at a 10% rate or more while at the same time preserving the capital to a large extent.

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Piotrekswat/iStock via Getty Images We like to publish on this topic a couple of times a year as we want to show our readers, especially the new and relatively younger investors – what is possible with starting and investing early for the future. The earlier you start, the easier the path will be. However, whatever your stage may be, there is no reason to be disheartened because it is never too late to start. If you are already into your late 40’s or even 50’s, it is still not late – it will just require a little more sacrifice and determination.

So, why a million dollars? A million dollars is simply a milestone. If you’re a diligent saver and investor, the first time you hit a million dollar mark in retirement savings, it’s an important achievement. That said, a million dollars is not the same as it used to be just two decades ago. In the early 2000s, most financial planners used to agree that a million dollars were more than enough to have a comfortable retirement with a high middle-class living. However, most planners would now advise shooting for 2 million to have a comfortable retirement. Due to inflation, the buying power of one dollar in the year 2000 is only worth about 60 cents today. So, even with that basis, now you would need over $1.6 million to maintain the same standard of living as you could afford with one million in the early 2000s. In fact, folks who have retirement 20 years away should definitely target 2 million to retire comfortably.

Nonetheless, these are just numbers thrown for a wider audience. They can vary greatly from person to person, depending upon basic living expenses, health status, personal spending habits and hobbies, availability of other sources of fixed income like pension and social security, and most importantly, the place where you decide to live in retirement.

To plan for retirement, you may have to answer some of the basic questions:

> What would be your basic expenses in retirement?

How much savings would be enough to retire?

When and at what age should you retire?

The three questions above are interrelated and interdependent. Once you have answered the first two questions, it is easy to determine when and at what age you should or could retire. As such, there is no pre-set or generic answer. Besides how much money you would need in retirement, there are other factors, mostly determined by your personal situation. Life expectancy has gradually increased in the last many decades, and people are working longer for a variety of reasons. Some feel they have not saved or prepared enough. Some just want to have that extra margin of safety and choose to work longer. Then there are many who just enjoy their work and rather continue to work and keep an active lifestyle for as long as possible. So, we guess the goalpost here may not be to just retire (for the sake of retiring) but to become financially free and ready to retire if you so desire or if the need arises for any reason.

For the vast majority of people, Social Security and Medicare play an important financial role in their retirement planning. For Social Security purposes, the full retirement-benefits age is considered as 66 years, which gradually rises to 67 years for folks born in 1955 or later. The early Social Security benefits become available at age 62, albeit at 25%-30% lower rates. Medicare plans are available to retirees at the age of 65, which is essential for many folks to be able to retire. That said, we think you should at least have a plan for early retirement by 62, just in case it is forced upon by […]

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