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Who would want to work all their lives and not get a minute of rest? Nobody! However, most people end up working till they are 60, while those who retire early either become dependent on their spouse or children for a living. There is a third option! A loophole that can help you retire by the age of 50 with enough financial resources to be independent and travel the world. Want to know how? Scroll down!
Comprehensive retirement planning is a must for those who would like to work rigorously in their early adulthood to fully live the rest of their lives.
Key Takeaways
A thorough retirement plan is a must for those who no longer want to work after the age of 50.
Registering for retirement plans such as the National Pension Scheme (NPS) and the Employee Provident Fund (EPF) helps in forced and involuntary savings.
Start investing in multiple areas and save at a rapid rate. Normal savings would not work for early retirement.
Create a list of your expenses. Keep healthcare and life insurance separately aligned from non-essential expenditures such as travel.
Rental income or side businesses can be smart sources of income after you leave your job.
Is Retirement Planning Only For The Aged? Strategies to Take!
Planning and making the strategies for retiring at 50 should not start when you are 40. Be vigilant about your expenditures, expected liabilities, and budgeting; the planning must begin as soon as you start earning. Measures you can take to do this are here:
1. Aggressive Savings and Investment:
The first and foremost method of increasing your retirement savings is by putting away at least 50% or more of your income. Major steps you can take to implement this are lifestyle adjustments and careful budgeting. Here are a few measures you can take:
Diversified and consistent investment: A financial scheme would not suffice for maximum savings. Monitor your Assets Under Management (AUM), called an investment corpus, and ensure it does not surpass or disturb your remaining investment plans.
Maximise Tax-Advantaged Accounts: Just like the 401k and pension plan in the US, India has plans like the National Pension Scheme (NPS), Public Provident Fund (PPF), and Voluntary Provident Fund (VPF), and you can sign up for them. These are all backed by the government and tax-free, also ensuring stable income after retirement.
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Did You Know?
Financial Independence, Retire Early (FIRE) method's 4% rule suggests withdrawing only 4% of total savings in the 1st year, adjusting for inflation.
Know how you want to spend your life after retirement. Do you want to live in a lavish locale with an expensive ambience, or do you plan to travel the world and eat the most delicious cuisines? Set your financial goals and how much you need to support your expenses, and make a detailed budget. Be sure to eliminate all your debt a few years before your retirement. Have an emergency fund separate from your total retirement savings. Do not take healthcare planning for granted. Seek advice from a financial advisor if you feel overwhelmed.
3. Lifestyle Considerations:
Creating alternative income streams is a must for a sustainable lifestyle after you have retired. Have several ETFs (Exchange-Traded Funds), create rental incomes, work part-time, and try freelancing projects if possible. Some of these sources will allow cash inflow even after you retire. Lifestyle changes can help you save more. If you spend more time shopping and making heavy purchases, retirement savings may not be enough to suffice for the rest of your life. However, if you are a little more miserly and do not hang out every weekend or throw bigger parties or travel that frequently, everything is possible. Even retiring at 50.
Conclusion
Retiring at 50 might seem unrealistic to many, but with the right motivation and plan of action, it is attainable. All you need is consistency and discipline. Aggressive saving is not enough. You must also have meticulous retirement planning. Seek help from the experts if you must. Try reaching out to the agents of Canara HSBC Life Insurance. Their agents are not the only ones who will sell and help you understand the plans but also advise you on how you can make the most of the money you have.
Glossary
Diversified Investment: Way to reduce risk and increase profit is to diversify investment by putting funds in different asset classes.
Assets under management (AUM): The total value of assets that an investment company manages for its clients.
National Pension Scheme (NPS): A market-linked, voluntary, and tax-efficient scheme that helps you to save for your future.
Retirement Portfolio: Sum of all your investments in various accounts, which is to provide you with a stable income after retirement.
ETF (Exchange-Traded Fund): Pooling of funds in one place from where investors can easily invest in stocks, bonds, or other assets.
FAQs
A strategy that helps you prepare for when you are no longer working in a stable job or a business. It involves carefully planning your retirement and saving up accordingly.
You can start by saving with the maximum rate and diversifying investments. Having a healthcare plan and emergency funds is another step towards retirement planning.
The 4% rule of retirement states that you only withdraw 4% of your total retirement savings; it helps manage funds for the longer run while maintaining a sustainable lifestyle.
India does not have a 401(K) plan, but the closest plans that match are the National Pension Scheme (NPS) and the Employee Provident Fund (EPF).
Early savings with a consistent approach is the one and only golden rule of retirement. It allows you to not only retire at the age of 50 but also with a handsome amount to spend the rest of your life carefreely.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
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