Tips to Plan an Early Retirement

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The majority of Indians retire at the age of 60. That’s what people would like to believe. But what if you’re not in this category and want to retire earlier? You may not be alone in your quest for an early retirement. However, with the best retirement plans, you may think you can retire early, but execution is quite another thing altogether. When you cease to earn an income, the cost of living may shock you if you have not constructed a plan regarding your finances. Retirement planning is a crucial aspect of financial planning and must be started when you start your career. Think of retirement planning this way, when you start young, you have more time to plan and grow your wealth.

The Best Retirement Plans for Early Retirement

Planning to retire early? A lot of people today toy with the idea of getting out of the rat race and relaxing. You may have your reasons to retire early, and these may include your desire to travel, give something like your time back to society, or start a small business. You may simply want to stop working. Can it be done? Sure it can, but only if you’re financially independent and if you have enough wealth to meet your current expenses without a regular income. As appealing as early retirement sounds, it may be a challenge to execute, so you need some handy tips to start you on the path. You may find some of these obvious and some not so obvious, but planning and implementing these strategies is the key to your goal of achieving early retirement.

Consider Retirement Expenses

While discussing retirement plans for individuals, the first tip involves making an estimation of how much money will be spent each month when you retire. While calculating your monthly expenses, you should consider the essentials that you need to spend on first. These include unavoidable expenses that you would spend on clothing, housing, food, utilities, insurance, healthcare, transportation, etc. In case you enter your retirement with debt on your plate, you have to estimate those costs too. After you have calculated what you require as necessary expenses, you must calculate your discretionary expenses - these include expenses you may incur for entertainment, hobbies, and travel. The point of this calculation exercise is to know how much money you will need to maintain your envisioned retirement lifestyle.

Invest in Investments

When you retire early, you have less time to save (and invest) for retirement and more time to spend in retirement. This should tell you that if you plan an early retirement, you must find ways, not just to save money, but to grow it. Since you have less time to save money, growing it through some of the best retirement investments may be worthwhile.

It is important to choose investment instruments offering lucrative returns over periods while beating inflation. The first step in growing a substantial corpus for use in retirement is by making some calculated and smart choices in investments. Studying different plans and instruments can make you savvy and educated about investing. As all the information you need is available online, your search won’t be tedious.

Multiple investment options exist out there, from equity-focused options to robust annuity plans offering you a regular income stream. Taking your investments a step further, you can consider re-investing your returns from investment to grow your wealth even more during your retirement. This lets you cover the extra costs you may have to bear due to certain discretionary expenses like going on a holiday once in a way or pursuing a hobby. Additionally, it also helps you to deal with inflation.

Effectively Manage Your Portfolio

Once you opt to retire early, you will find that the tips for the best retirement plans involve consistently managing and tracking your financial portfolio. It is vital that you make investments on a regular basis and actively manage your investments to maximise your returns. You must also grasp the investments that match your needs and those that are not working for you. If you find that some investments are not worth your time and effort, then those should be discarded, and other more lucrative ones sought.

Cover for Health - A Must

The best retirement plans, especially those geared towards early retirement involve getting health coverage. As you get older, you are likely to face more challenges regarding your health than when you were younger. Therefore, you require health insurance that safeguards you against critical conditions and lifestyle-related illnesses. You must also consider medical emergencies like sudden accidents. All this can be covered through a comprehensive health insurance plan.

Final Thoughts

If you are planning to retire early, then you must think of the future in the present day. Planning is the key to having an early retirement with costs covered to maintain the lifestyle you desire during your golden years. However, you may have to make some sacrifices in the present day to ensure you have enough of a corpus to retire early. Tips help you to formulate a basic roadmap and if you stick to a plan, you may well be able to retire before your prescribed retirement age. 

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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