Dear DTA,
I’m starting late. I’m in my early 50s. I don’t want to have a poor retirement. And I’m afraid of our country’s healthcare situation. Any advice?
-Mark C.
Hi, Mark.
Thanks for writing. We appreciate your readership. And I can certainly appreciate your concerns.
Let’s break down a few things real quick.
First, starting toward a healthy and enjoyable retirement in your early 50s is a bit late; however, better late than never.
So it’s great that you’re getting ahead of things now.
Second, the US healthcare system is no doubt a mess.
But you’ll almost certainly qualify for Medicare in less than 15 years (at age 65), which will totally change your dynamics.
It’s mostly between now and then that you have to be concerned about.
Breaking that down further, you can check out the Medicare expense framework you’ll likely be facing by visiting the official Medicare costs at a glance site.
Part A should be taken care of for you. Most people qualify for premium-free Part A.
It’s then mainly Part B you’d have to worry about. The standard premium is $135.50/month.
These are just the basics; co-payments and deductibles are in there, too. In all, it’s probably more complicated than it should be.
However, even factoring in a couple hundred dollars per month in healthcare costs shouldn’t break your bank. That’s assuming you set yourself up properly and plan for this.
That’s what I’m going to help you with today.
Before I get into that, let me back up a moment.
I want you to know where this information is coming from.
I’m writing back to you today because I’m fairly qualified to field questions like this.
I’ll tell you why.
I successfully retired in my early 30s.
And I didn’t even start saving and investing until I was almost 28 years old.
Furthermore, I started off completely broke. Actually, worse than broke. I was in debt!
How did I do this?
My Early Retirement Blueprint will tell you everything you need to know.
Suffice to say, I saved as much money as I could and invested as intelligently as possible.
The saving part of the equation took some major lifestyle changes. Lifestyle changes you, too, might have to consider.
Anything that will give you more capital to work with and put your future retirement in a better position.
Going from zero to retirement in about 10 years is extraordinary. Extraordinary output requires extraordinary input.
I’ll give you some potential lifestyle changes to think about.
Downgrade your accommodation. Get by with an older car, one less car, or no car at all. Cut way back on social engagements and restaurant visits. Get rid of cable.
That’s just the expense side of the budget.
You also want to think about how to increase your income.
This might involve working harder/longer at your job, or even getting a second job. Also, taking on an enjoyable side hustle of some kind is a great idea.
A side hustle could even be incorporated into the lifestyle you already have.
If you can’t downgrade your accommodation, think about renting a room. If you can’t get rid of your car, think about signing up to be a driver on a car-sharing platform.
Once you’re able to save high percentage of your net income (preferably 50% or more), it’s time to invest.
I can tell you that the investment strategy I personally chose to retire so early in life is dividend growth investing.
Fellow contributor Dave Van Knapp wrote an excellent series of articles that go over what this strategy is, why it’s so great, and how to successfully implement it.
Make sure to read his Dividend Growth Investing Lessons for more on that.
DGI is a strategy that promotes investing in high-quality companies that pay growing cash dividends.
At its simplest form, that’s what it is.
And it makes a ton of sense.
After all, nobody would want to invest in low-quality companies for the long haul.
You’ll be hard-pressed to spot low-quality companies on the Dividend Champions, Contenders, and Challengers list, which tracks and compiles data on more than 800 US-listed stocks that have raised their dividends each year for at least the last five consecutive years.
Growing dividends and high-quality businesses go hand in hand.
It’s pretty obvious.
Any high-quality company that’s producing regularly growing profit should efficiently be managing its free cash flow, which often means returning cash to shareholders.
As profit rises, so to the dividends.
These growing dividends, by the way, are a fantastic source of passive income that you can use to fund your retirement.
That’s exactly what I’ve done with my growing dividends.
My FIRE Fund – a real-life and real-money stock portfolio – generates the five-figure and growing passive dividend income I need to live off of.
It’s not the biggest portfolio in the world.
But I built the bulk of this in just six years – on a middle-class income.
Since you’re also dealing with a truncated period of time, I think there’s a lot you can glean from this.
You should know that you can start today and still set yourself up for a very happy, healthy, wealthy, and successful retirement in just over a decade’s time.
I’m proof that a lot can be accomplished in a short time frame, even on modest means.
But you’ll have to be very serious about saving and investing.
The saving part is ultimately up to you to figure out in terms of your lifestyle – I don’t know anything about you and what kind of lifestyle you’re living right now.
However, I believe we have a lot to offer on the investing front.
Specifically, I personally highlight a compelling long-term dividend growth stock investment idea every Sunday.
These ideas are presented to the community, free of charge, after going through a rigorous analysis and valuation.
I share these ideas via the Undervalued Dividend Growth Stock of the Week series.
These are high-quality ideas to work with once you have some capital to invest.
You have a great opportunity in front of you to turn things around and set yourself up for a great retirement.
Make sure to get started today.
I wish you luck and success.
Jason Fieber
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Disclaimer: Jason Fieber is not a licensed financial advisor, tax professional, or stock broker. Please consult with a licensed investment professional before investing any of your money. If your money is not FDIC insured, it may decline in value. To protect the privacy of our readers, any names published in this article are under aliases. In addition, text may be edited, omitted or paraphrased for grammar or length.