Retirement is often considered synonymous with old age. However, in the recent years, this term has seen a new meaning with many young people opting for an early retirement. The new generation of retirees are quitting the workforce and are settling for a retired life in their early 50s. As exciting as the prospect of not working and leading a relaxed life sounds, it is, in reality, a difficult goal to achieve. The sooner you retire, the lesser is your bandwidth to save and invest for a post-retirement life with all the comforts and security.

So if you are planning an early retirement, here are some tips that can help you plan it better:

Make the Right Investment

When you retire early, you also lose out on the comfort of your monthly salary. You have a limited timeframe to save for your retirement years while you are still earning. For example, consider an individual who starts earning at the age of 25. If this individual decides to retire at the age of 52, the time frame for saving is only 25 years.

This is why it is important to not only save but also invest your money so that it grows with time. It is essential to pick investment instruments that offer great returns over time and can beat inflation. The first step of building a sizeable corpus that can be used as your retirement income is by making smart investment choices.

There are multiple investment options available, right from equity-based options to annuity plans that offer you a regular flow of income. You must make an informed decision after doing a thorough research and consulting trusted financial advisors if required.

Increase the Investment Amount

Another essential aspect to consider while preparing for your early retirement is that every penny counts. All your year-end bonuses, increments, and investment gains need to be channelised into savings and investments. And you have to consider inflation as well. Every rise in price is affecting your cost of living, leaving a dent in your savings and investments. The reason is that with the rise in inflation, the amount you save or invest from your income every month may not rise at the same rate. Therefore, the rise in price puts extra pressure on your savings and investments. So you must increase the amount you are investing for your retirement every year to keep up with the rising cost of living.

Actively Manage Your Investment Portfolio

Another important aspect you must keep in mind when planning to retire early is that consistency is the key. It is crucial to invest regularly and manage your investments actively. In order to maximise your returns, you must also closely monitor your investments. Understand which investments are suitable for you and which are not. You may have invested in a particular product 5 years ago based on your needs and wants back then. See if the investment holds its ground in the present day as well and if it has been able to counter inflation. If you find discrepancies, let go of some of these investments.

Get a Health Cover

As you grow older, you are likely to encounter more health problems. Hence it is essential to have a health cover that protects you from critical illnesses and lifestyle-related ailments from an early age. In case of a medical emergency, it can help you with hospital bills.

It is very important to be focused and determined in the present in order to enjoy an early retirement. You may also have to make some sacrifices to your lifestyle in the short term to achieve the target set for your retirement. But as long as it all ends on a good note, the journey will be worth it. These early retirement tips can help you create a roadmap for yourself. Try to implement them as often as you can and you will be able to live a comfortable and secure retirement.





1. What are the benefits of early retirement?

Early retirement gives you the opportunity to pursue your goals like travelling, starting a new venture, pursuing a hobby and more. It can also provide an opportunity to follow your passion which may have been sidelined due to professional commitments. Early retirement can help you focus on your personal growth which provides a greater sense of fulfilment.

2. How can I calculate how much money I need for early retirement?

After retirement, you want to maintain your current lifestyle, meet medical expenses, and may also have goals like travelling, pursuing a hobby, starting a new venture and more. When calculating the money needed for early retirement, you should begin by identifying your financial goals.

Identifying your goals will help you calculate the amount that you would need for your retirement. You should also consider inflation while calculating this amount. An online retirement calculator can help you with the process of planning your retirement and calculating the amount that you need to save for retirement.

3. What role does healthcare play in early retirement planning?

Healthcare is a crucial factor in early retirement planning. You must take into consideration medical insurance premiums, preventive healthcare costs and emergencies. It is also important to consider inflation when planning to save for your post-retirement healthcare expenses. These expenses tend to rise and can deplete your savings. Being financially prepared for any healthcare situation can ensure a worry-free retirement.

However, it is important to consider factors like the policy's premium, policy term and expected returns when making your decision. Additionally, you must compare different endowment plans to select one that aligns with your financial goals and risk appetite.

4. Are there tax* implications to retiring early?

The tax* implications of retiring early can vary depending on the investments you choose for your retirement savings. Tax* laws can differ based on the type of investments, duration of the investments, amount of taxable income, and more.

It is important to understand the tax* implications of different retirement investments and income sources on your early retirement plan when you opt to retire early.

5. Should I pay off all my debts before retiring early?

It is advisable to pay off all debts before retiring early. Payment of interest towards debt can significantly reduce your retirement savings. Since your income stops after retirement, it becomes difficult to replenish your retirement funds.

Clearing your debts before retiring early ensures your savings are preserved for your regular expenses, emergencies and other needs during your retirement years.

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*Tax benefits may be available as per prevailing tax laws. Tax benefits under the policy are subject to prevailing conditions and provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per applicable rates. The tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details


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