While we are young, we do not think about investing in a scheme that might help us accumulate a wealthy retirement corpus. That’s because we do not take retirement planning seriously or consider it an integral part of financial planning. But in reality, one is bound to need more money for survival during their post-retirement life than they need right now. Hence, one must not take retirement planning lightly and depend on their risk appetite and investment objective invest in a scheme which might hold the potential to help them get near to their goal.
A lot of people are regretting being stuck in their stagnant nine to five work routine. A lot of these people also wish to retire early and give themselves enough time to pursue their passion. But if you want to retire early, you have to be prepared beforehand with a commendable corpus in your hand.
Here are simple steps which might help you with early retirement:
Learn to calculate inflation: Two decades ago, the price of daily supplies was at least half the price it is now. For example, a half-liter bottle of mineral water cost Rs. 5, which in today’s time costs Rs. 10. This has happened because of inflation, and the cost of living is bound to get higher in the next 20 years. You can also take the help of an online inflation calculator, which will tell you how much money you need in the future to fulfill your daily expenses. When you start saving for retirement, make sure that you consider inflation.
Become debt-free: If you have any unpaid loans, credit card bills, or any debts on you, try getting rid of them before you retire. Of all the miseries, the thing you want is to be debt-ridden when living on a fixed budget. So if you owe any financial obligations, it is better to repay all your debts and become debt-free before hitting retirement.
Get accustomed to living on a fixed budget: Remember that when you retire early, you still might have some high recurring expenses like your children’s school/college fees. Hence, you don’t just need a decent corpus to take care of these things, but you also need to adjust your lifestyle and learn how to live on a fixed budget. You will be having limited income sources and hence, getting rid of unnecessary expenses like eating from restaurants every day, maximizing your credit card every now and then, borrowing money at the end of the month from your peers, etc.
Don’t buy a house whose installment becomes unbearable: Remember that if you have purchased a home, especially in metropolitan cities like Mumbai, retiring early may not be a good idea. And even if you still are persistent on hanging up your boots early, make sure that your EMIs (every month installments) don’t eat up your retirement corpus. Buying a house is a long term investment, and hence retiring early in such a situation shall be reconsidered.
Start saving early: The reason one must start saving early is that this way, you have a chance of turning small amounts into a large retirement corpus. That’s because if you start saving by investing in a solution-oriented scheme like a retirement fund at an early stage in your career, your investments stand a chance of benefiting from the power of compounding.
Save more than you should be saving: You must be aware of the familiar phrase, ‘the more, the merrier.’ This quote is applicable when it comes to saving for your retirement. The more you save now, it is going to come in handy during your post-retirement life. That’s because with old age comes health-related expenses, which can cost a bomb at that time. Hence, if possible, save as much as you can now so you can have a stress free retired life.
Invest only within your boundaries: There are numerous retirement funds/schemes available for investors, and depending on your financial goal and investment objective, you should wisely choose a scheme and invest according to your risk tolerance. Because solution-oriented schemes like retirement funds invest in equity, which is prone to market volatility. Hence it is better to invest only within your limits.
Follow these simple steps, and you should be able to retire early and finally pursue your passion.
