Wish to Retire Early - Follow these 5 Golden Rules!

Gone are the days when the typical age of retirement was 65 years, jobs were satisfying and had a work-life balance.

In the current dynamics, there are ever-increasing performance expectations from corporates that have created an unsustainable working regimen for the working class. Most youngsters in their thirties are all consumed in work and find themselves clocking in as many as 80 hours each week. Long hours of work is the new norm, and it’s not surprising that most youngsters today want to retire early.

Youngsters can achieve a lot in a short period as their careers are becoming front-ended with good earnings and growth. Early retirement will allow them to pursue their passion and work on things they always wanted but never got the time to do. However, early retirement is not as easy as it sounds and one needs to plan well before thinking about it.

Here are 5 golden rules to follow for a successful early retirement:

1)Know Your Retirement Amount: It’s entirely up to you whether you want a luxurious retirement or a basic life after retirement. It is very important to know the total amount you will need after retirement. It can be directly calculated using your expected yearly expenses after retirement. If you plan to live a luxurious life with regular vacations or if you plan to live a basic life around the basic comfort of your food, clothing and shelter, the amount required for your retirement fund should be calculated accordingly. Moreover, you also need to consider an additional amount for medical and other emergencies keeping in mind the average rate of inflation.

2)Start Investing Now And Be Consistent: Investing is one of the most important rules if you want an early retirement. Investing can multiply your money at a much faster pace compared to simply saving it at home or using a savings bank account and keeping it idle. As per experts, a minimum of 10% of the monthly income should be invested towards retirement.
Early and consistent investing grows your money by multiple folds through the power of compounding. For instance, Rs. 10,000 invested each month at 10% would be more than Rs 20 lakhs in 10 years, Rs 75 lakhs in 20 years, and Rs 2.2 crore in 30 years. Over the long term, regular investments of small amounts can become significantly huge.

3)Choosing The Right Investments: Knowing to invest isn’t going to multiply your money, choosing the right investment option will. Choosing your investments for retirement is very crucial for a successful retirement plan. Multiple options are available in the market such as Life insurance policies, Fixed-deposits, NPS, or investing in stock markets. A probable strategy could be investing 30% of your money in equity mutual funds, 10% in high growth stocks, 30% in long-term endowment plans, 20% in debt securities, and 10% in safe-haven assets like gold. However, the required investment and the amount of return differs from person to person as it depends on their current age, income, desired retirement age and risk profile. So, it’s very important to understand the risks associated with each investment in your portfolio before investing.

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4)Regular Review Of Investment Portfolio: When you plant a sapling, you take care of it, you ensure it grows, and moreover that you ensure it gives you fruits. It becomes all the more crucial to perform a regular review of the investment portfolio. Suppose you want to invest in stocks, debt, and gold in the ratio of 5:4:1, make sure you stick to it whenever you make any changes to the portfolio. Regular reviews work like a charm in re-balancing the portfolio if your investments take a hit due to worsening market conditions.

5)Stay Disciplined And Patient: Dreaming a fortune is not wrong, but expecting it to happen overnight is! Make Sure you don’t deviate from your investment plan for retirement for fulfilling other goals. Investing a higher percentage of your money into high-growth stocks can be tempting but it also poses a higher risk to the investment. It’s very important to stick to your goal when it comes to retirement planning. Additionally, you should not be in a hurry to change your portfolio over short-term moves. Be patient, remember “Rome was not built in a day”.

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Early retirement in its growing popularity is very attractive but a lot of work goes behind the planning. Also, it’s a huge decision and any wrong step can lead to a lot of challenges in the future. Make use of the aforementioned rules and you will be on the right track!

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This release was published on openPR.