In India, there are so many workers who want to retire early from their job but they don’t know-how. To help you with this, we have organized an early retirement plan to prepare you for everything before getting retired.
How Early Retirement is Different from Standard Retirement?
Early retirement is not that much different from standard age retirement. As in early retirement, a person retires from work at an early age than the standard retirement age.
But early retirement doesn’t mean that one has to stop working and spend all the savings. This is one of the misconceptions that people have about early retirement.
A planned early retirement is a part of life in which you will retire just from working for money to start a purposeful life.
Retire Early from the Rat Race
Do you know what the best part about early retirement in India is? May be no. Let me tell you what? You will still not get old as you will get retire in middle age. Hence, you can use that time to make a positive change to your personal and social life.
Apart from this, you can learn something you wanted to pursue at a younger age; because you didn’t have the opportunity before.
Your Indian Early Retirement Plan
An early retirement plan is a two-stage process:
- Plan Establishment stage
- Plan Implementation Stage
1. Plan Establishment Stage of Early Retirement
The plan establishment stage is a basic level for your early retirement in India. It further has four areas to support the next stage of plan implementation. They are,
I) Choosing the Early Retirement Age
ii) Evaluation of Expenses
iii) Retirement Expense Projection
IV) Corpus Calculation
i) Choosing the Early Retirement Age
The early retirement age is one of the simple parts of the early retirement plan process. Before thinking about anything first you must decide your early retirement age. For deciding this, you need to consider some factors that can help in making a customized early retirement financial plan for your entire lifetime.
Here are the factors you need to consider:
- A current monthly expense.
- Expected monthly expenses after retirement
- Annual or one-time expenses like children’s education expenses.
- Amount needed for savings
- Current monthly income.
These are the five factors that one needs to consider before getting retired in India.
ii) Evaluate Your Expenses
If you are a person who already knows the art of budgeting, that’s great!
You don’t? Don’t fret! I’ll help you do that.
For an exact evaluation of your expenses, you must know the average monthly expenses of the past two years. Let me clear you how you need to evaluate your expenses. Firstly, calculate the average expense incurred per month.
- Get your bank account transactions statements including your credit card statements of the past two years
- Categorize your expenses based on the nature of the expense.
iii) Calculate Corpus
Corpus is the overall expected amount of early retirement monthly income, the annual recurring expenses, and the onetime expenses as such.
Use the “Expected Post Retirement Expense Calculator” to calculate your post-retirement monthly income and the corpus.
2. Early Retirement Plan Implementation Stage
At the first glance, I am going to clear you one thing that this stage is not an easy task. As we all know implementation of any plan somehow gets hard. But with the following techniques, it is not going to be difficult either.
i) Habit of saving 50% for Early Retirement
No doubt, you have to manage the multifarious expenses of your home but still if you make a habit of saving 50% from your income for your early retirement. Moreover, you must consider this method for your retirement month too.
I have already told you that it can be tough for saving 50% of your income. But take the baby steps today, you can run like an athlete tomorrow.
ii) Increase Your Savings Rate
You can two options to save money from your income; one is by fixing the leakage and the second one is by switching to the second tap.
Cut-Down Expenses
In this method, your only priority should be clearing all your debts including loan repayments as early as possible, if you have any. As we all know, debt traps are literally the dream killers, so kill them before it kills you. By doing this, you can focus on your regular monthly expenses.
Generate A Passive Income
Generating passive income is somehow easy if you have passion in that profession. Let me give you an example, you always wanted to become a blogger or influence the universe when you were young. But you could not, because, at that time, you did not have an opportunity or other reasons like parents did not allow. Hopefully, you have the opportunity now.
So now you have time to pursue your dream so start learning skills that you have an interest when you were young. And then you can monetize your skill to increase your passive income.