Early retirement is no longer a myth. Today, many of you might choose to retire early to fulfil your post-retirement goals as well as live a high-quality life in the future. According to a survey, over 40% of the Indian population aim to retire early. While retiring early can seem easy, it can be difficult to do so if you do not have adequate retirement savings.
Before you opt for early retirement, let’s go through the top seven steps mentioned below that can allow you to retire early with sufficient resources:
- Begin your retirement planning at a young age
Retirement can be a long-term commitment. Since retirement planning is a long process, you should begin at a young age. When you are young, you might have a significant time in your hands to build a large corpus with early retirement planning. Moreover, an early retirement plan can allow you to lead a comfortable life in the future without financial constraints.
- Invest in the right pension plans
Many of you might strive hard during your active working years to save money for your retirement. According to a survey, 70% of Indians save for their retirement. Although savings can be crucial for retirement, you should invest in pension plans for the growth of your hard-earned money. A pension plan can generate a regular stream of income as well as better returns.
- Create an emergency fund
As the name suggests, an emergency fund can allow you to deal with contingencies, such as loss of income, physical disability, critical illness, and so on. After you start earning, save a specific proportion of your income for such emergencies to ensure that you do not dip into your retirement corpus. During your active working years, start creating an emergency fund can be helpful in looking after unannounced emergencies for the next 3-6 months.
- Consider your post-retirement goals
During your active working years, you might sacrifice your dreams to fulfil the financial requirements of your family. After retirement, you might aim to meet your post-retirement goals, such as traveling, starting a new venture, pursuing interesting hobbies, and so on. To reach your post-retirement goals, you should begin your retirement planning at an early phase of your life. With an early retirement plan, you can fund your post-retirement goals with ease.
- Keep a tab on your finances
It can be crucial to keep a tab on your finances to reach your retirement comfortably. Drafting a budget can be helpful in keeping a tab on your finances. When you create a budget, you can analyse your current expenses and identify your future expenses. In addition to this, you can understand how to retire early by estimating how much money would be adequate to suffice your future.
- Cut down irrelevant expenses
To develop adequate funds for your retirement, you should cut down on unnecessary expenses. When you cut down your expenses, you can ensure that you have an ample amount of funds in the future to lead a smooth retirement period. Moreover, it can let you save more money to meet your monthly expenses, such as groceries, utility bills, and so on.
- Diversify your financial portfolio
Retirement planning is an essential part of your financial portfolio. For retirement, many of you might have opted for investment tools that can let you diversify your portfolio. For instance, if you have invested in a Unit-linked pension plan, you can move your assets from one fund to another to secure your invested capital.
To conclude, retirement is no longer about age. Whether you want to retire early or late, you should have an ample amount of funds to do so. With adequate retirement savings, you can ensure you meet the financial requirements of your family as well as lead a stress-free retirement period.