In India, the usual retirement age can be between 55-60 years of age. However, many of you might aspire to retire early between 45-50 years. The primary reason for retiring early can be for living the desired life after retirement. While many of you might aim to fulfil your unachieved goals, the rest of you might wish to lead a comfortable life in the future.
Whether you plan to retire late or early, retirement planning can play a major part of your life. However, early retirement planning might require special attention. Therefore, let’s go through the top five tips mentioned below that can help you to retire at the age of 45 years:
- Begin your retirement planning early
The key to a successful retirement period is to start retirement planning early. If you aspire for early retirement, you should begin the retirement planning immediately after you receive your first pay-check. When you plan your retirement in advance, you might be able to lead the life you desire after retirement. Moreover, you should draft an estimated retirement budget that should include your living expenses such as rent payment, groceries, utility bills, and so forth to prevent any downfall in the future.
- Identify your post-retirement goals
Many of you might aspire to retire early to fulfil your post-retirement goals such as traveling, pursuing interesting hobbies, starting a new business venture, planning your child’s dream wedding, and so forth. According to a report, a majority of the urban Indian population plan to retire early to live a high-quality life in the future. However, if you have post-retirement goals, you should accumulate your wealth accordingly to meet your dreams after retirement.
- Cut down on irrelevant expenses
After you start earning, you might be in the habit of spending on fancy clothing items, expensive gadgets, or automobiles, and so forth. However, if you are planning to retire early, you should limit your expenses to develop a disciplined financial habit. When you inculcate a disciplined habit of spending, you might save more for your retirement. As an aspiring retiree, you should focus on meeting your routine expenses such as groceries, rentals, EMI payments, and so on. The remaining half of your income should be saved to lead a comfortable retirement period.
- Invest in a strategic manner
Although investments might scare you, it can help you to accumulate wealth for your retirement period. Investing in a prudent manner can help you in building a substantial corpus for maintaining the current standard of living after retirement. During your active working years, you can start by investing a small proportion of your income every month in a systematic way. For instance, you can invest Rs. 5,000 at a young age, which in turn can create a retirement savings corpus worth Rs. 75 lakhs by the time your reach the retirement period.
- Create a contingency fund
During an unfortunate event such as critical illness, physical disability, loss of income, and so forth, you might tend to deplete your earnings. However, if you have a contingency fund under such a scenario, you can utilize your savings to tackle the emergency situation financially. A contingency fund can offer financial support during an emergency without letting you create a hole in your pocket. Ideally, you should build a contingency fund in a way that can easily cover you against uncertainties for the next 3-6 months.
To sum up, the above-mentioned steps can allow you to lead a stress-free retirement period as well as meet your post-retirement goals with ease. If you struggle with the early retirement planning, you should seek professional help. With the right expertise, you might be able to assess your on-going planning process and determine what you should work on before you retire at the age of 45 years.
