Some advantages of early retirement include having the freedom to travel, relax while spending time with friends and family, pursue a hobby or enjoy a stress-free life.
10 Tips to Plan for Your Early Retirement
If you are done with your 9-to-5 grind and wish to explore new opportunities that life has to offer, you can consider going for early retirement. Please note that early retirement is not a situation when you just stop working; it’s the beginning of the period when you start taking control of your lifestyle.
Although the average age to retire is around 60, you can also plan for early retirement. Let us see some essential tips to make a better early retirement plan!
10 Tips to Make a Better Early Retirement Plan
Here are some essential early retirement planning tips:
1. Estimate Your ExpensesYou must make a budget for the daily expenses you will have post-retirement. This financial planning will help you estimate your future expenses and plan your investments accordingly.
2. Start Planning EarlyOne of the essential criteria for early retirement is early planning, mainly from the day you start earning. Unlike others who plan a regular retirement, you must not postpone your financial planning even by one year. If you do so, you will be unable to build a sizable corpus to support you after retirement.
3. Know Your Basic RequirementsYour regular cash inflow in the form of your salary will stop after retirement, so you must know your basic financial requirements. Consider thinking about generating passive income from multiple sources; this will help you take care of expenses during retirement.
4. Make the Right Savings and Investment PlanIf you make a perfect savings and investment plan by allotting your funds correctly, you can earn good returns on retirement. However, ensure your current income is sufficient to bear your investments and that you do not put yourself into debt.
5. Actively Manage Your Investment Portfolio.Investing regularly and managing your investments actively if you wish to maximise your returns is vital. Here, you must understand which investments suit you based on your lifestyle choices.
6. Set a Target for Your Retirement AgeIt is important to set a target for your retirement age to know when you will have enough financial stability. One needs to achieve a balance between the size of retirement funds and retirement period length to ensure adequate financial support.
7. Get Health InsuranceAn individual will likely encounter more health problems as they grow older. Hence, it is essential to have health insurance to protect you from critical illnesses and medical emergencies during old age.
8. Try to Pay Off Any Existing Debts.Try to Pay Off Any Existing Debts.Plan your debt repayments and get out of the debt cycle before your retirement. Clearing off debts early in life can create a smoother retirement planning process.
9. Settle for a Budget-Friendly LifestyleSettle for a simple and budget-friendly lifestyle. You will have access to limited income during your retirement age; hence, you must remember to spend money wisely on necessities and luxuries.
10. Adjust Your Current Budget
Reconsider your current budget and adjust your expenses to a bare minimum on transportation, food, utilities and housing costs. Moreover, look for ways to bring in extra income that would increase your early retirement corpus.
If you make small sacrifices to your daily lifestyle now, you can enjoy a stress-free life post-retirement. However, it is equally important to enjoy your present day and plan for your future wisely. Follow these simple tips mentioned above, build the best early retirement plan, and pursue your passion for the rest of your life.
FAQs about Tips for Early Retirement Plan
The amount of retirement funds you need to accumulate for early retirement depends on your lifestyle choices and post-retirement plans. As a rule of thumb, multiplying your desired annual income in retirement by 25 will provide you with an amount that will ensure a financially secured post-retirement life.
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