Want to Retire at 55? 3 Things to Do Early in Your Career.

Many people end up working until their 60s or beyond because they have no choice. But you may find that retiring at 55 is more ideal for you because it gives you a fairly lengthy career while also allowing you to exit the labor force at a time when your health might still be great.

If your goal is to retire at 55, you’ll need to start working toward it at a young age. Here are three things to do early in your career if you want to be able to stop working at 55.

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1. Save consistently

Developing good savings habits early on could lead to a large nest egg by your mid-50s. If you want to retire at 55, begin funding an IRA or 401(k) as soon as you have your first steady paycheck.

It’s OK if you can only swing modest contributions early on in your career, especially if you’re simultaneously trying to build an emergency fund and pay off student loans. The key is to start saving for retirement from as young an age as possible so your money has time to grow.

2. Choose smart investments

The money in your IRA or 401(k) shouldn’t just sit in cash. You need to invest that money if you want to be in a position to end your career at 55.

Stocks carry risk but are a great wealth-building tool, so it pays to go heavy on stocks while maintaining a diverse investment mix. You can do so by choosing stocks across a range of market sectors or loading up on broad market ETFs or index funds.

To give you a sense of what your savings might grow to with a stock-heavy strategy, let’s assume you’re able to contribute $1,000 a month to a 401(k) starting at age 22. If you do so through age 55 and your portfolio delivers a yearly 8% return (which is a bit below the stock market’s average), you could be sitting on $1.75 million. With modest expenses, that may be enough to kick off retirement at 55.

3. Avoid lifestyle inflation

There’s a good chance your income will rise during your career. As it climbs, it’s important to keep your spending in check if you want to retire at 55.

This doesn’t mean you can’t or shouldn’t enjoy your success. If you find yourself earning more at 29 than at 23, by all means, pay for a few conveniences like takeout meals or a house-cleaning service to make your life easier.

At the same time, try to avoid committing to much larger expenses you can’t easily get out of, like a new home or car, as your income increases. Instead, put that money into your savings if you’re set on retiring early.

Retiring at 55 is doable with the right plan. Save early, invest wisely, and don’t overspend as your income rises if you’re eager to end your career at 55 and kick off the retirement of your dreams.

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