Retirement Planning:Early retirement means retiring before the age of 60. Gradually the attraction towards early retirement is increasing among the people.Early retirement requires saving while still in the job and investing more during this time also becomes essential.
The decision of early retirement should never be taken in haste. Before leaving the job early, one should thoroughly assess one’s current financial condition, financial goals and post-retirement needs. Necessary steps should be taken by considering these aspects during the job. Along with saving, one should invest in the best options available.
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Early retirement is possible only when you achieve financial independence, where you do not have to depend on a full-time job for a long time to meet your needs.If you are considering early retirement i.e. retiring at the age of 50, then to achieve this goal, planning will have to be done from the beginning of the career. Let us understand what kind of preparations are needed to decide on early retirement.
Assess your financial situation
The first step to early retirement is to understand your current financial situation. This includes assessing your savings, investments, and liabilities. Make a list of all your assets and debts to get a clear picture of how much wealth you have. Doing so will help you understand how much more you need to save and invest to reach your retirement goals.
BankBazaar CEO Adil Shetty says that it is very important to calculate the retirement corpus. This is the amount you will need to fulfill your needs after retirement. He says that in such a situation, it is important to keep in mind all the expenses like inflation rate, medical etc. There is a very popular rule regarding retirement corpus which people should know about. It is that when you decide on early retirement, you should have 25-30 times the current annual expenses in the form of retirement corpus. For this, planning will have to be done from the first job.
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Invest while you are on the job
This is possible only when you have a good paying job. If not, then you will have to focus on increasing your salary. For that, you will have to look for a job with a better salary. If you are unable to get a job, then you will have to do part-time or freelancing for additional income. With this additional income, you will be able to invest more and more money. The more you invest, the more it will help you retire early and the pension on retirement will also be higher.
While investing money, you may have to take some risk. Instead of investing in a single scheme, invest in many investment options. For example, you can invest some money in safe investment options like PPF, FD. You can also invest in NPS. However, this is a market linked scheme. Due to investing in the market, there is a little market risk in it, although there is a possibility of higher returns in it.
You can buy a rental property with some part of the remaining amount, which will give you income for years. You can also get a good return on land by buying it. Apart from this, keeping in mind your risk-taking ability, you can invest in the stock market or mutual funds for good earnings.
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Buy health insurance to avoid medical expenses
Medical expenses can quickly drain your savings. In such a situation, it is very important to have health insurance coverage for yourself and family. This health coverage helps in reducing medical expenses. People should give preference to a comprehensive health insurance policy for health coverage so that coverage for critical illnesses, hospitalization and OPD expenses can be provided on it.
Make a plan to save tax
Special investment planning can help you save maximum tax. For this, invest money in tax saving schemes like PPF, NPS, ELSS (Equity-Linked Saving Scheme) so that you can get the benefit of tax exemption. Plan keeping the tax rules in mind at the time of withdrawal and investment.
Restrain unnecessary expenses
For early retirement, it is important to understand your financial condition along with maximum savings and investments. It is also important to pay attention to expenses. For early retirement, you should spend keeping in mind your financial condition. For this, it is important to assess your expenses and avoid unnecessary expenses. Adopt a lifestyle according to your financial condition so that your money is spent on things that are really important for you. Remember, the more you invest, the sooner it will help you retire and the more pension you will get on retirement.
Keep an eye on financial planning
It is important to keep an eye on regular financial planning for early retirement. Monitor your investments, keep track of your expenses and take necessary steps from time to time to stay on track. Financial markets and personal circumstances can change, so it is important to stay updated.
With proper financial planning, the goal of retiring before the age of 60 can be achieved. By saving and choosing better investment options according to your financial situation during the job, you can achieve financial independence. After being sure of this, you can take the decision of early retirement.
