Ask Yourself: “How Much Money Do I Need to Retire at 55”

Posted by Mary Grace under Retirement Planning on March 6, 2016

A reader asked; how much money do I need to retire at 55? How do I know the exact amount of money to use as my retirement funds so that I will retire comfortably without relying to my family or loved ones. Everyone wants to retire at 55, but they are not sure how to make this dream a reality.

If you are planning to retire early, you just need to answer some basic questions. Not all people who retire early are happy. Not all people who retire at 55 have enough money to spend for the rest of their lives.


In this article let me give you some ideas and point of views about the following;

  • Advantage and disadvantage of retiring at age 55
  • Questions to ask before you decide to retire at 55
  • Answer to reader’s question

Advantage of Retiring at Age 55

Before you think how much money do you need to retire at 55, you need to think about the good benefits or the disadvantages of retiring at age 55.

  • You will have more quality time to spend for your loved ones, friends, family, for yourself and to God. Imagine if you live longer (80 years old), you have 25 years to enjoy life to the fullest.
  • You will enjoy more things that an old people can’t. A man at 55 is stronger that a person aged 65, am I right? no, it depends on the lifestyle of an individual.

Disadvantage of Retiring at Age 55

Of course, if there is a good side, there will be a bad side. Here are some of the disadvantages when you retire at 55.

  • You will get more pressure in saving too much money every month to meet your desired retirement earning asset. Say for example, if you are 30 years old now and wants to retire at 55 with enough money amounting to half million dollars, you will save more because you only have 25 years of preparation. While on the other hand, if you plan to retire at 65 at the same age (30), you will only save small amount to acquire your retirement earning asset because you still have 35 years of preparation.
  • You will get bored if you are not really ready to retire early. That’s why, it is necessary to ask yourself first, the right age for your retirement  and your desired lifestyle should also be planned carefully.
how much money do I need to retire at 55 depending on your lifetsyle

Image Credit: OTA Photos on Creative Commons 2.0 via Flickr

How Much Money Do I Need to Retire at 55?

Actually I once asked myself this question. I asked myself, if I am 20 years old now, how much money do I need to retire at 55. There are retirement calculators you can use to know how much money to save every month for your retirement.

Well, the answer to the question “how much money do I need to retire at 55” is simple. Here is my opinion about that question. If you have questions or other ideas, just leave them in the comment box.

Retirement Planning Answer

You need to know how much your annual income today, the amount of money required to save per month, your financial goal and the inflation rates every year. Say for example, if you are 25 years old now and wants to retire at 55 with $500,000.00, you still have 30 years to save and acquire half million dollars.

If your annual income now is $15,000, how many percentage you should put to your retirement funds. If you decide to put 10% in your retirement accounts, you are saving $1,500 every year. Now, if you save $1,500 every year within 30 years, you will only get $45,000.00.

Your goal is to save enough retirement funds amounting to half million dollars, right? Actually that amount is just an example. Now, let’s make this things very clear. If you are now 25 years old earning $15,000, and the inflation rate is 3%, after 30 years, you should earning higher than $15,000 and this time you should earning it without any effort on your part.

In this example, I will not include the inflation rate. Assuming if today you are earning $15,000 per year and after 30 years you should earning $50,000 per year effortlessly or passively. How can you do it? How can you make it happen since you want to retire at age 55.

Here’s the solution, if you are 25 now and have 30 years of preparation, save as much money as you can and invest them in an investment vehicle until you have enough money that earns $50,000 every year. If you retire at 55 and wants to earn $50,000 passively, you should have earning asset worth $625,000 that earns 8% per year.

Calculate: How Much Money Do I Need to Retire at 55?

Here is the amount of money you need to retire at 55. A simple computation.

Initial Deposit 0.00
Ongoing Deposit $450.00
Deposit Frequency Monthly
Annual Interest Rate 8 Percent
Term 30 Years
Compounding Yearly
Total Deposit $162,000.00
Total Interest $476,238.09
Maturity Amount $638,238.09
8 Percent of $638,239.09  $51,0591.272

I know you can easily understand the table above. You should invest $450.00 per month in an investment vehicle that earns 8 percent per year within 30 years to accumulate $638,238.09. You only need to have a total savings of $162,000,000 after 30 years. But through compound interest, you earned $476,238.09.

Answer the Question Below to Increase Your Retirement Planning IQ

Assuming you are now 55 and you acquired $638,238.09, what would you to do this money?

  1. Will you keep on adding money until you make million dollars?
  2. Will invest it in a low risks type of investment and get the profits every year to sustain my desired lifestyle?
  3. Will you  pull out them in your investment basket and spend them by buying new car, houses, and spend them on traveling and other things that makes you happy as a retiree?
  4. Will donate some money to charity and the excess should be use in your daily expenses?

Retirement Quote of the Day

The question isn’t at what age I want to retire, it’s at what income. ~George Foreman

Please share your answer below using the comment box. Do not forget to share Retirement Planning IQ answer to the questions “how much money do I need to retire at 55” with your friends in Facebook, Twitter and Google Plus. Now, join the conversation by adding relevant answer to the question.

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