Do You Want To Retire By 55?

We help professionals in their 30s and 40s do just that

How To Retire By 55

Free 7-Week Educational Series

Expert advice you can put into action straight away to help you achieve financial independence and retire by 55. Join our exclusive educational series to make that dream a reality.

Best Financial Planner Washington DC

Welcome To District Capital Management

Hi, I’m Alvin,

I’ve experienced what it’s like to be in the unknown. Not knowing if you are making the right financial choices to better your future. You work hard and make good money but life can feel overwhelming trying to juggle everything. You deserve quality time with the ones you love and to do the things that bring you joy. That’s why I started District Capital Management.

We are a fee-only financial planning firm serving professionals in their 30s and 40s. We have helped over 300 professionals just like you. Our mission is to provide affordable, best-in-class financial advice. We don’t just give you a plan and leave you to navigate it alone. We are there with you through life’s highs and lows, providing personalized support to help you stay on track. You deserve a financial advisor who is in your corner and truly has your best interests at heart.

I’m a fiduciary financial planner, a CFP® professional, and a CFA® charter holder. I hold an MA in International Relations from Johns Hopkins University. I also volunteer as a Treasurer for Lutheran Social Services, a non-profit dedicated to aiding refugees and immigrants in the U.S. My wife, Marlee, and I live in Virginia. During my free time, I love hiking, swing dancing, and playing Pickleball.

See How We Can Help You Live Your Best Life

What does retiring by 55 look like to you? Perhaps it’s envisioning yourself lounging on a beach in the Bahamas, creating unforgettable memories with your loved ones, or indulging in your favorite hobbies, like playing pickleball all day (that’s definitely on my list!).

Our comprehensive fee-only financial planning aligns your life goals with your money goals.

If you’re ready to make your money work smarter so you can retire early, we are here to help!

We Get These Questions A Lot

The amount of money you should have to retire at 55 depends on various factors, including your lifestyle, time horizon, anticipated expenses, and retirement goals. There is no one-size-fits-all solution.

According to Fidelity, people saving for retirement should have seven times their salary by 55. That means that if your annual salary is currently $140,000, you will want to plan on saving at least $980,000. However, sometimes salary is not the best indicator of how much you should save.

We often suggest aiming for a retirement savings goal equivalent to 25 times your annual expenses. This rule of thumb is derived from an assumed 4% withdrawal rate.

Here's a simple calculation:

  1. Determine annual expenses: Calculate your estimated annual expenses in retirement, including housing, healthcare, leisure activities, and other essentials.

  2. Multiply by 25: Multiply your annual expenses by 25 to get a rough estimate of your retirement savings goal. This assumes a 4% withdrawal rate.

  3. Consider other income sources: Will you be receiving other sources of income in retirement, such as Social Security benefits or pensions? Subtract these amounts from your annual expenses to determine the actual amount needed from your retirement savings.

  4. Adjust for inflation: Factor in inflation to ensure that your retirement savings maintain their purchasing power over the years.

Remember that the amount needed to retire at 55 is unique to each individual. Regularly reassess your retirement savings goals as your circumstances evolve. Life events, changes in expenses, and fluctuations in the market can impact your retirement plan, making it essential to review and adjust your strategy as needed.

A holistic financial advisor can provide personalized insights into your specific situation and help you create a comprehensive retirement plan to achieve your goal of retiring by 55.

  • Current Expenses: Analyze your current expenses to understand your spending patterns. Identify areas where you can cut costs and redirect funds toward your retirement savings. Your current financial habits can provide insights into your future needs.

  • Relationship: Are you married or living with your partner? If you are, you’ll want to think about your overall household income and expenses. Ideally, you both should save seven times your salaries if you both have salaried jobs that make up your household budget.

  • Location: Where are you planning to live? You'll need more income if you live in a high-cost area. If you don’t live in the area that you plan to retire in, you can use a cost of living calculator to help you budget.

  • Additional streams of income: Are there any other income streams you can use to supplement your savings? If you are planning to retire by 55 then there is a good chance that you have additional income streams. This additional income should be taken into account when planning for your retirement.

  • Debt: Will you still have any debt when you retire at 55? Ideally, you should enter retirement with minimal or no debts. Reducing the debt burden frees up more funds for your retirement needs. Try to pay off outstanding loans, mortgages, and credit card balances before retiring.

  • Travel and hobbies: Do you plan on traveling a lot during retirement or are you going to spend the majority of your time at home? Do you have any expensive hobbies? The costs of travel and hobbies should be taken into account since these can be costly.

  • Healthcare Costs: Consider potential healthcare expenses during retirement. Medical costs often increase with age, and having a solid health insurance plan is essential. Factor in premiums, deductibles, and potential out-of-pocket expenses.

  • Inflation: It’s important to factor in inflation when projecting future expenses. Prices for goods and services typically increase over time, impacting your purchasing power. Adjusting your retirement savings for inflation helps ensure your funds retain their value.
  1. More time with family: Reaching the top of your profession takes significant time and energy. This may have resulted in you missing out on some important moments with your loved ones. Retiring at 55 gives you time to make that up and could give you additional time with your family. Taking vacations and attending birthdays and other special events is also easier without work getting in the way.
     
  2. Reduced stress: Retiring at 55 may reduce work-related stress and contribute to improved overall well-being. Stress at work can negatively impact your health.

  3. Pursue personal passions: Retiring at 55 means that you will have more time to enjoy hobbies, passions, or personal projects that you may have postponed during your working years. I’m planning to learn tango and play lots of pickleball when I retire early!

  4. Career flexibility: While retiring at 55 may mean stopping work altogether, to some it may just mean a change of pace to a different career. Being able to retire at 55 means that you have the flexibility to walk away from any job on your terms without financial stress.
  1. Financial considerations: Early retirement often means relying on retirement savings for a more extended period. Without proper financial planning, individuals may face challenges sustaining their lifestyle throughout retirement.

  2. Healthcare costs: Healthcare expenses tend to increase with age, and early retirees may need to cover health insurance costs until Medicare eligibility at age 65. Securing affordable and comprehensive health coverage can be challenging.

  3. Longevity risk: Retiring early increases the potential duration of retirement, leading to the risk of outliving one's savings. Individuals need to ensure their retirement funds can sustain them for a potentially lengthy period.

  4. Lack of purpose: Some retirees who retire early lack purpose without the structure and engagement provided by work. It's essential to have fulfilling activities and hobbies planned for the retirement years.

  5. Changes in social dynamics: Retirement can alter social dynamics, especially if friends or family members continue to work. Maintaining social connections and a sense of community becomes crucial.

  6. Loss of employer benefits: Early retirees may lose access to employer-sponsored benefits such as healthcare, life insurance, and retirement contributions.

Achieving your goal of retiring by 55 is within reach with our free 7-week course. This comprehensive program covers a variety of essential topics including;

  • Calculating your net worth
  • Decluttering your expenses and finding out what’s important to you
  • 3 life planning questions to ask yourself
  • Zero-based budgeting
  • Maximizing the use of tax-advantaged retirement accounts and investment strategies

 

Throughout the course, we address common questions about retiring at 55, providing valuable insights and guidance to help you navigate this significant life transition. We look forward to you joining us on this educational journey towards a well-planned and fulfilling retirement.

1 million dollars used to be the traditional benchmark for retiring. However, 1 million dollars isn’t what it used to be. Nowadays, many financial advisors are recommending retirees aim for closer to $2 million.

While $2 million is a substantial amount and can provide financial security in retirement, it's crucial to conduct a thorough analysis of your unique circumstances. Without knowing your situation, there is no way to say if 2 million dollars is enough to retire at 55.

The Rule of 55 is a provision in the United States tax code that allows individuals who leave their job or retire in the year they turn 55 (or later) to make penalty-free withdrawals from their 401(k), 403(a), 403(b),  or other employer-sponsored retirement plans. Withdrawals, however, are still subject to taxes. This rule provides an exception to the standard early withdrawal penalty that typically applies to withdrawals from these retirement accounts.

It's crucial to note that the Rule of 55 is a specific provision within the U.S. tax code. This could change at any time. Individuals considering using this rule should consult with their financial advisor to ensure they meet the criteria and understand the implications for their specific situation.

If you have a traditional IRA, you generally can withdraw from it before age 59.5 without a 10% early withdrawal penalty. There are certain exceptions. With a Roth IRA, if your account has been open for at least 5 years, you can always withdraw your original contributions tax-free and penalty-free. If you want to withdraw your earnings, you’ll need to wait until age 59.5 to withdraw without a penalty, unless you qualify for an exception.

You cannot begin collecting social security if you retire at 55. The earliest you can choose to start receiving social security benefits is 62. However, It's essential to carefully consider the financial implications of claiming Social Security at 62. Your payments will be considerably less than what they would be if you waited until full retirement age instead.

The longer that you wait to claim social security the larger benefit you will receive. If you wait until age 70 to collect social security you can receive a monthly payment that’s equal to 132% of your regular benefit amount.

Source

Typical minimum age for benefits

Social Security

62

Medicare

65

401(k)s

59 1/2

Individual retirement accounts, or IRAs

59 1/2

The ideal age to start planning for retirement is as early as possible. We specialize in helping professionals in their 30s and 40s maximize their money and work towards the goal of retiring by 55. We have several clients who are saving 25% or 30% of their gross income towards retirement, spread across their 401(k), IRA, and brokerage accounts. Regardless of when you begin, proactive and personalized planning remains key to achieving a secure and fulfilling retirement.

The answer is, it’s definitely realistic, if:

  • You have a plan.
  • You have an accountability partner and an expert, helping you implement that plan and refine it when needed.

If you want to have a quick glimpse into the future, check out this retirement income calculator by Vanguard. By using it, you will be able to see where you stand concerning your retirement goal and how different paths affect your calculations.

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This free educational series is provided by District Capital Management and does not constitute personalized financial advice or recommendations. The content presented in this series is intended to educate and inform participants about general financial principles, strategies, and concepts. Participants are encouraged to conduct their own research and due diligence before engaging in any financial transactions. Participants are also encouraged to consult with a qualified financial advisor to discuss their individual financial situation and specific investment goals before making any financial decisions. Participation in this educational series is voluntary, and viewers assume full responsibility for their financial decisions and actions based on the information presented. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. District Capital Management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where District Capital Management and its representatives are properly licensed or exempt from licensure.

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