Retirement: Want to retire before 60? These 7 ways will make your dream a reality…

In this busy life, everyone wants to live a comfortable and tension-free life. Just imagine how it would feel if you were living your dreams without the worry of a job at the age of 40 or 45! It would feel good. But as easy as it is to dream of early retirement, it is equally challenging to fulfill it. However, with the right financial planning and smart investment strategy, you can easily achieve this goal. Here are the ways that will make your dream of early retirement come true and take you on the path of financial independence.

Define Your Goal

The first and most important step in planning for early retirement is to set a goal. Keep in mind that you cannot move in the right direction without a goal.

First of all, ask yourself some questions.

Retirement age: At what age do you want to retire? 40, 45, 50, or 55?

Lifestyle: What kind of life do you want to live after retirement? Will your monthly expenses remain the same as today or will they increase?

Monthly Expenses: What is your monthly expenditure as of today? Include house rent/EMI, bills, food, travel, and other needs.

Future Expenses: Make a separate budget for travel, hobbies, children's education, marriage, and health expenses.

The answers to all these questions will tell you how much Retirement Corpus you will need.

Get into the habit of investing, not saving.
Just saving is not enough for early retirement. You have to invest your savings in the right place so that they can grow over time. The sooner you start Early Savings and investing, the more you will benefit from the Power of Compounding.

What to do?

Make a rule: Aim to invest at least 30-40% of your income every month.

Control expenses: Identify unnecessary expenses and reduce them.
Auto-Debit: To convert your savings into investments, set up auto-debit in options like SIP so that discipline is maintained.

Be smart, invest in the right place (Invest Smartly)

Smart investment is necessary for your money to work for you. Diversify your investments in different places so that the risk is reduced and the returns are better.

Where can you invest? Understand

Mutual Funds: Long-term investment in equity mutual funds through SIP (Systematic Investment Plan) is considered best for early retirement. It can give you inflation-beating returns.

Stock Market (Stocks): If you have an understanding of the market, then invest directly in the shares of companies with strong fundamentals. It can give higher returns, but the risk is also higher.

Pension Plan (NPS): The National Pension System (NPS) is an excellent option for retirement. It also helps you save tax along with your regular income.

PPF and EPF: Public Provident Fund (PPF) and Employee Provident Fund (EPF) are known for safe and tax-free returns. Invest money in this for a retirement fund.

Real Estate: By investing in property, you can create a source of rental income for the future.

Get Rid of Debt
If you have a home loan, personal loan, or credit card debt, then this is the biggest obstacle in your path to early retirement. The interest on the loan eats up your investment earnings.

What to do?

Repay high-interest loans first: First of all, eliminate expensive loans like credit cards and personal loan.

Reduce the burden of EMI: Whenever you get extra money, make a part-payment of the loan so that the principal can be reduced. A debt-free life will give you mental peace and financial strength.

Secure Your Health
Health expenses can suddenly increase after retirement. A single major medical emergency can wipe out your years of savings.

What to do?

Health Insurance: Make sure to get a good health insurance plan for yourself and your family. It should also include coverage for critical illnesses.

Emergency Fund: Keep aside an amount equal to at least 6-12 months of expenses as an emergency fund. You can keep it in a liquid fund or savings account.

Create Passive Income Streams

Retirement means that your salary will stop coming. Therefore, create sources from which you get regular income without much effort. This is called Passive Income.

Where can passive income come from?

Rental Income: Rent received from property.

Dividend: Dividend received from investing in good stocks.
Online sources: You can earn money by blogging, creating a YouTube channel, or creating online courses based on any skill.

Beat Inflation

Inflation is a silent killer that gradually reduces the value of your savings. If your monthly expenditure today is ₹50,000, then at an average inflation rate of 6%, this expenditure will increase to around ₹1.60 lakh after 20 years.

What to do?

Always invest in places where the returns are higher than the inflation rate. Equity mutual funds and real estate help in beating inflation in the long term.

FAQs
1. How much money is needed for early retirement?
This depends on your lifestyle and monthly expenses. As a general rule (Rule of 25), you have to accumulate a Retirement Corpus 25 times your annual expenses.

2. Is it possible to retire at the age of 40 in India?
Yes, it is possible. For this, you have to invest aggressively from the age of 20-22 and strictly follow financial discipline. The FIRE (Financial Independence, Retire Early) rule can be helpful.

3. What should I do if I started investing late?
If you have started late, then you will have to increase your savings and investment rate (about 40-50%) and may have to extend the retirement age a little.

4. Which is the best investment for retirement?
No single best investment option can be given. Create a diversified portfolio. Include equity, debt, and real estate, etc., in it. You can also take advice from an expert in this matter.

5. Why is passive income important?
Passive Income becomes your source of regular income after retirement, so that you do not need to spend your retirement fund quickly, and your money lasts for a long time.

Disclaimer: This content has been sourced and edited from Hr Breaking. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.