How I’m Retiring at 50
I’m 33, work in IT consulting, and my wife and I have a combined salary of $300,000. But what really sets us apart? We’re planning to retire by 50. Right now, we’ve built up about $160,000 in a taxable brokerage account—money we plan to tap before we touch our retirement accounts. If you’re thinking about retiring early, this kind of strategy matters a lot more than you might think. The key is tax efficiency. Every dollar we save today is carefully placed to give us flexibility tomorrow. That means tax-loss harvesting to offset gains, and keeping a portion of our safer investments in municipal bonds, which are tax-free—especially if you buy them from your own state. This account is going to bridge the gap between age 50 and 59½, when we can finally access our retirement accounts without penalties. We’re also aiming for tax diversification—having money spread across tax-deferred, tax-free, and taxable buckets—so we can control our tax bill every step of the way.
Now let’s get nerdy for a second. I’m a huge fan of the “efficient frontier”—Harry Markowitz’s theory that you can build an optimal portfolio for a given level of risk. It’s not just about buying index funds and crossing your fingers. We want to balance risk and return by staying globally diversified, tax-aware, and flexible. I’m treating my brokerage account the same way I treat my retirement accounts—growth-focused, but with an eye on long-term risk.
We’re not the only ones asking questions. Andy and April, another couple thinking about early retirement, wanted to know if they could live off dividends. The answer? Technically yes, but it’s not as passive as you’d think. Every time a company pays out a dividend, the stock drops by that amount—so it’s really no different than selling shares. Plus, chasing high-dividend stocks can backfire if it limits your diversification. The better move? A globally diversified portfolio that throws off a mix of growth and income while keeping taxes in check.
If you’re using a brokerage account for early retirement, there are a few tricks to keep in your pocket. First, understand your capital gains and how distributions from mutual funds or ETFs are taxed. Second, use tax-loss harvesting during market dips to your advantage. Third, know the difference between qualified and non-qualified dividends—only one gets that lower tax rate.
A big piece of this puzzle is projecting your spending. We’re looking ahead and calculating our future expenses—including daycare now and healthcare later—then reverse-engineering how much we’ll need. The idea is to cover the early years with our brokerage account and let our IRAs and 401(k)s keep compounding until we’re eligible to use them penalty-free. Dynamic withdrawal strategies are a must—rigid rules like the 4% rule don’t give you enough room to breathe when life (or the market) changes.
Some people we know are skeptical about Social Security. They call it a Ponzi scheme, and I get it—when you’re younger, it can feel like a long shot. But the real definition of financial freedom isn’t about whether Social Security shows up. It’s about living debt-free, having money to cover what you care about, and not being shackled to a paycheck. Only about 1 in 10 Americans say they’ve achieved that. We’re trying to be in that group, not just someday—but sooner than most.
And yes, we still live like real people. We drive a Subaru Forester and a Jetta. We drink spicy cocktails, hazy IPAs, and cheap Heinekens. We’re not trying to “buy” freedom—we’re planning for it. That’s the difference.
Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.
IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.
• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
