The Buyt Desk
Early retirement is a thought that sounds pleasant. But planning an early retirement is not that easy. It requires meticulous financial preparation and goals.
For this, mere saving is not enough as it will not help you with the corpus you would need to support your retirement life. It requires some extra effort, so here, we have prepared five steps that you can take to plan early retirement.
Start Saving Early
If you are vigilant for early retirement, focus on your present earning and expenditure. Because the thumb rule for early retirement is to plan early, perhaps from the day you begin to earn. Every year lost in this planning will augment your burden to accumulate the sizable corpus that would let you sail through retirement time.
If you are a spendthrift, you need to change your habit and start saving more rigorously. You can do this by refraining from impulsive buying, taking lifestyle-related loans, spending on transportation, clothes and food.
You can save significantly by cutting down these costs.
Invest in Financial Assets
Saving is not enough for early retirement you must invest. You need your money to grow with time. Harness the power of compounding and put your money in investment schemes that assure you higher returns. Mutual Funds are one such financial asset that can give you inflation-beating returns. You don’t need a hefty amount to start your investment in mutual funds. As low as only Rs 500 per month could be the starting point. Mutual Funds also gives you the flexibility to invest via small monthly instalments which are called systematic investment plans (SIPs). You can also take the help of professional SEBI registered financial advisors. They can help you with customizing your investment plans based on your income and goal.
Hedge Your Health With Health Insurance Plan
Don’t let your or a family member’s illness wipe out all your savings. With the ever-rising treatment cost, health insurance is a must. And the thumb rule here is, the earlier you will start, the better it will be. With the rise in age, the premium of health insurance also increases. And for people with lifestyle-related diseases, it comes with more stringent terms and conditions. So, it makes sense to buy a health insurance plan when you are young.
Avert Debt
If you are planning early retirement, avert debt as much as possible. This will help you in achieving your early retirement goal faster. A debt trap can not only cause financial stress but cause mental stress too. Never think of using your retirement corpus to pay off your debt.
In any case, if it is unavoidable to take a loan, try to pay it as early as possible. Pre-paying will save your principal amount and will also help you save on interest.
Manage Your Investment
Investing the money and forgetting is not a thoughtful move for the early retirement plan. Instead, you must be watchful of how your money is growing. If you find your corpus is not growing as anticipated, you can shift your money to another investment plan to get better returns. This way, you would be able to accumulate a huge corpus in a few years.
