You can’t keep working for a lifetime. Your capacity to work keeps going down with age, as does your effectiveness to do them. This is why you get to hear many people say that over time, you should replace hard work with working in a smart manner. All things said, what we are coming to is the time when you have to retire from your work life and just relax. There are a number of people who wish to retire early. You may not be one of them and that’s completely fine. The early retirement planning tips we have for you today do not just benefit those seeking early retirement. They benefit you as using them, you can retire comfortably instead of doing so early.
Early Retirement Planning Tips
To retire early or comfortably, you have to start saving/ investing your money early. ideally, the process should start from the moment you find your first job. However, that is, in many cases, a difficult thing to do. A simple trick to do this is by observing your Provident Fund contribution. For example, say your PF contribution every month is Rs 5,000 out of a salary of Rs 20,000. You save just Rs 2,000 every month for the next 10 years. After 10 years, you have Rs 8,40,000 with you, without accounting for interest. Now if you wish to retire at the age of 50 and you start this process at the age of 25, you have Rs 2,100,000 at the age of 50. Considering that PF amount and salary will go up every year, you can see how much you get to save.
The above example shows you the worth of saving up early in life. For this reason, we did not even include the interest rates. This is the importance of starting early in the savings/investment process.
Insure Yourself and Your Family
A simple hospitalisation of you or a family member can give your saving a jolt. What we are trying to say is that your savings will be pointless if you cannot protect them from unforeseen shocks. Hence, going for insurance is a must to not just help you save but safeguard your money. Yes, it is an additional expense. The benefit, though, is that you can avail tax deduction on your insurance expenses. So, why even complain.
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Avoid Big Loans
Unless necessary, always avoid going for big loans, if you wish to retire early/comfortably. A crucial early retirement planning tip is avoiding loans for things like costlier cars and bikes. If you already have a car/bike, don’t buy a new one just because you wish to. If it is giving too much trouble, then buy a new one, as repair costs may offset any savings you intend. Similarly, unless you can keep your savings untouched, also avoid things like costly vacations, home loans, etc. Keeping your savings unaffected is the key to saving more and retiring early/comfortably.
Don’t Touch Your Savings
One crucial early retirement planning tip that is flying under the radar is this. The problem with using your savings is that once you start doing so, it is difficult to stop until the entire fund is finished. You may think that using your savings for just one need will be all. Soon, you will realise that even the smallest of your needs is being fulfilled by the money from your savings. So, just keep all that you save aside and try to manage your finances better.
Take Calculated Risks
You are not going to retire tomorrow. Since it is a long-term goal you are after, try investing your money in some high-yield assets. However, diversification is the key here. The point is that FD and other savings deposit accounts will not help you save much. Hence, investing in stocks (for example) can help you get a bigger return for your investment for some risk. However, if you start investing all your money in stocks only, you may end up losing all that you stand to gain. Taking risk is different from taking little risks or taking big risks. It is a move that you have to calculate and then make.