Life
General
Claims
Resources
Simplifying Life Insurance in India
What Is Early Retirement & How to Plan for It?
source: birchwoodfp
The decision of an individual to retire depends majorly on factors like lifestyle goals, financial capabilities and unfulfilled hobbies. Although the average age to retire in India is around 60, people nowadays are planning for early retirement to meet new opportunities.
Before finding out the best way to retire early, let’s discuss what early retirement is!
What Is an Early Retirement?
Early retirement is when an individual stops working or quits his/her job before the usual statutory retirement age. For example, retirement in someone’s late 40s can be considered early retirement.
Early retirement is usually planned due to someone's incapability to work further or achieve specific goals. For instance, an individual might go for early retirement to pursue his/her passion for cooking and turn this passion into a source of income.
However, in some instances, one might not plan for early retirement, and the individual might need more assets to last longer. Thus, every individual, whether or not they want an early retirement, should plan for it to be financially secure.
What Is Considered the Early Retirement Age?
For private sector employees, the average age range for retirement can be anything between 60 to 65 years. On the other hand, government employees usually retire when they attain 60 years of age.
It can be considered early retirement if anyone plans to retire before this age. Thus, any age below 60 years can be referred to as early retirement age. Nevertheless, it is ideal to assess your financial responsibilities before deciding your preferred retirement age.
How to Plan for Early Retirement?
1. Start Planning Early
The first criterion for early retirement is early planning, mainly from the day you start earning. Unlike others, who plan a regular retirement, you shouldn’t postpone your financial planning even by one year.2. Estimate Your Expenses
You must budget for the daily expenses post-retirement. This early financial planning will help you estimate your expenses and plan your investments accordingly.3. Make the Right Savings and Investment Plan
If 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 strive to avoid recurring debt.4. Actively Manage Your Investment Portfolio
To maximise your returns, investing regularly and managing your investments actively is vital. You must understand which investments will suit you based on your retirement fund plans.5. Get Health Insurance
An 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.
If you make these small sacrifices to your lifestyle now, you can enjoy a stress-free life post-retirement. However, it is equally important to enjoy your present life to live a fulfilled retired life. Thus, follow these simple, early retirement planning tips to live the golden years of your life peacefully.
FAQs about Early Retirement
What are the main indications for early retirement?
Some indications to know whether you are ready for early retirement are as follows:
- If you are free from all your debts like loans, mortgages, credit card dues, etc.
- If you have enough funds to support your dependents and their needs.
- If you have saved and invested aggressively in your entire working period and have sufficient liquid funds.
Is early retirement a good idea?
Early retirement is a good idea if you plan it accordingly and use it to pursue creative or personal interests. Additionally, it can benefit people who wish to live a life away from the mundane complexities of work-life.
However, it is essential to remember that early retirement is not suitable for everyone, and you should consider all your needs before making any decision.
What are the cons of retiring early?
Important Articles about Early Retirement Plan
Other Important Articles Related to Retirement & Pension Plans
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
Latest News
14-03-2025
Life Insurers See 5.7% Premium Growth: April-Feb Report
In February, life-insurance companies saw an 11.6% drop in new business premiums (NBP) due to a 22% decline in premiums from state-owned LIC. However, from April to February FY25, overall premiums grew by 5.71% to Rs 3.35 trillion. LIC's premiums increased by 1.90% to Rs 1.90 trillion, while private insurers saw an 11.11% growth, reaching Rs 1.46 trillion.
04-03-2025
Life Insurance Agents Surge: 3 Million in 2025
Volkswagen India will launch the Golf GTI and Tiguan R-Line by the end of Q2 2025. The Tiguan R-Line, unveiled in 2023, features aggressive styling, larger 19-inch alloy wheels, and LED light bars. Inside, it boasts a 12.9-inch touchscreen, 10.3-inch digital instrument console, and ambient lighting. Powered by a 2.0-litre turbo-petrol engine with 261bhp and 400Nm, it offers six-speed manual and seven-speed DCT automatic transmissions.
19-02-2025
Life Insurance: FDI Boosts Growth Potential | 2025 Update
The Indian life insurance sector is set to grow significantly with the government's decision to raise the Foreign Direct Investment (FDI) limit to 100%. This move will provide the necessary capital for industry expansion, allowing insurers to increase mortality coverage and market penetration. Private insurers have already seen a notable rise in retail sum assured, outpacing new business premiums. The shift to unit-linked investment plans (ULIPs) may pressure margins, but increased capital inflows will help meet the growing demand for coverage.
12-02-2025
Budget 2025 Brings Changes to ULIP Taxation
The Union Budget 2025 has redefined the taxation landscape for Unit Linked Insurance Policies (ULIPs). Starting April 1, 2026, ULIPs with annual premiums exceeding ₹2.5 lakh will be classified as capital assets, subjecting their gains to capital gains tax rather than treating them as income from other sources. This amendment aims to align ULIP taxation with other equity-oriented investments, ensuring a uniform tax treatment across financial products. Policyholders are advised to reassess their investment strategies in light of these changes to optimize their tax liabilities.
02-02-2025
New Tax Rules for Life Insurance Premium
Starting April 1, new income tax rules will impact ULIPs and other life insurance policies with premims over 5 lakh will no longer enjoy tax-free maturity benefits under Section 10(10D). This move aims to align insurance with genuine risk coverage rather than high ticket investments. Smart investors might now explore alternate tax-saving strategies!
12-12-2024
Policyholders Now Get Increased Surrender Value
The new business premium of life insurers was Rs 377,960 crore in the fiscal year ending March 2024. Starting October 1, policyholders will receive higher refunds if they discontinue their policies, as per new IRDAI regulations. This change may lead to increased premiums, impacting insurers' margins. Policies must comply with the new surrender value norms by September 30. Despite initial opposition, the changes aim to improve customer benefits and are expected to positively impact the insurance industry over time.
10-12-2024
Premium Costs for Life Insurance Decrease in November
In November 2024, new business premiums (NBP) of life insurance companies fell by 4.5% year on year (YoY) to Rs 25,306.56 crore, mainly due to a 27.17% drop in LIC's premiums. However, private insurers saw a 30.84% YoY growth in NBP to Rs 13,555.45 crore. Revised surrender value norms, effective October 1, led to enhanced special surrender values for policyholders. Despite the overall decline, private sector growth improved, cushioning the fall. The life insurance industry saw a 15.7% YoY growth in NBP during April–November 2024.
18-11-2024
Govt's FDI Plan: New Insurance Rules
The government plans to allow 100% foreign ownership of insurance businesses, attracting international companies. This proposed legislation also lets individual insurance agents offer policies from multiple companies. The changes are part of the Insurance Amendment Bill, set for introduction in the winter session of Parliament. These measures aim to increase insurance penetration, currently at 4%, by allowing more companies to underwrite policies and enabling agents to sell various covers.
08-11-2024
Record Growth: Life Insurers Boost Premiums 18.56%
The Life Insurance Council reported a 13.16% year-over-year growth in October 2024 New Business Premiums (NBPs), reaching ₹30347.6 Crs, up from ₹26819.01 Crs in October 2023. Year-to-date (YTD) collections also increased by 18.56%, from ₹185195.81 Crs to ₹219561.64 Crs. This growth is attributed to life insurers' focus on first-time buyers. Despite this, new policy issuances dropped by 41.6%. Individual single premiums grew by 8.60%, with overall YTD growth at 14.16%.
01-10-2024
Higher Refunds for Life Insurance Policyholders from October 1, 2024
Starting October 1, 2024, policyholders who surrender their traditional endowment life insurance policies will receive higher refunds due to new rules from India's Insurance Regulatory and Development Authority (Irdai). The exceptional surrender value (SSV) will be increased, providing more flexibility and liquidity. This change benefits those exiting policies early, offering refunds even after the first year. Insurers must now include detailed surrender values in policy illustrations, enhancing transparency for policyholders.
Read More
Renew & Download Policy Document, Check Challan, Credit Score, PUC & more
Anytime, Anywhere. Only on Digit App!
Rated App
Rated App
Scan to Download
