Retire by 50: How to Manage Your Finances to Retire Early

Dennis G. Murray, MA


August 16, 2017

In This Article

Age 60: Nearing the Finish Line

Perhaps you're not retiring as early as you would have originally liked, but 60 is just fine for plenty of physicians, and it's still 5 to 10 years sooner than most physicians typically retire. You've probably been working for roughly 30 years to this point, so your income, the value of your investments, and any equity you've built up in your practice are at, or very close to, their highest levels. If all your other ducks are in a row and you've gotten a green light from your financial adviser, now's a great time to make the break.

What could derail your intention to retire at this point? Any number of things, of course, but for physicians nearing age 60, there may be elderly parents to think about. If they haven't saved enough, you may be asked to help foot the bill for their long-term care.

Furthermore, older physicians sometimes get remarried later in life, occasionally to a spouse who may still have one or more dependents. If this describes you, you may want to let your attorney in on your plans to retire early, especially if you still carry debt that includes alimony and child support. The point here is that what looked like a secure nest egg a few years ago may not provide enough income going forward to maintain the lifestyle you had envisioned for yourself in retirement.

Does that mean you should put your dreams of quitting medicine on hold? Not necessarily. But now would be a good time to take stock of where your life is at and what it might look like 5 or 10 years from now. It might make the most sense to keep working.

Dr Greenwald offers this advice: "When I have clients who want to be retired in a relatively short span of time — say, within 3 to 5 years — and the numbers don't work, I have them look at their jobs. What do they like about them and what don't they like? Can they cut back on the parts they don't like and keep doing more of the parts they do?"

How to Make the Money Last Past Age 60

A diversified 50:50 mix of stocks to bonds and other fixed-income investments still makes sense for many physicians who are turning 60. Again, you'll likely live 20 years or more in retirement, so you don't want to get too conservative too soon. At the same time, you don't want to get overly aggressive, so stay away from high-flying stocks or other speculative investments. (For tips on what to avoid, see Doctors' 5 Most Frequent Investing Mistakes—and How to Avoid Them.)

Choose low-cost, diversified mutual funds that spread your risk over many dozens of individual stocks or bonds. You've probably been following this slow-and-steady approach with great success for many years, so there's no urgency to change things up this late in the game. Go with what got you here, as the saying goes.

This doesn't mean you can never take a chance on something more speculative: a friend's new wine and tapas bar, shares of a specialty mutual fund, or whatever strikes your fancy. Just make sure this speculative new investment doesn't account for more than about 5% of the total value of your portfolio. You don't want to risk creating a cash flow hole you won't have time to dig yourself out of.

Another type of investment physicians who retire early might want to take a closer look at are annuities. Although they certainly have their detractors, in large part because of their high fees and restrictions, annuities are being touted by some financial planners as a safety net for early retirees, as well as for retirees in general.

"Annuities have gotten a bad name in some quarters," Dr Greenwald says, "but different kinds of annuities, in particular a single premium immediate annuity, can be a good way of making sure that you can't outlive at least part of your portfolio." With a single premium immediate annuity, you pay a lump sum and the insurance company that issues the annuity begins paying you a fixed amount either monthly, quarterly, or annually, depending on which schedule you choose. These payments continue for the remainder of your life.


Although money is integral to being able to retire early, it's not the only important element. You also need a plan for what you want to do, including those things that will bring you purpose and meaning.

"This is especially true for a doctor who derives a lot of personal satisfaction from his or her work," finds Hearn, referring to both the financial and nonfinancial considerations of early retirement. "What will replace that feeling of satisfaction when you're no longer working? Without a detailed plan, you can end up with a bad case of 'buyer's remorse' in retirement."

"As I tell my clients, successful retirees are those who don't just retire from something, but to something."


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