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How To Make An Early Retirement Plan

Early retirement plan for beginners

How To Make An Early Retirement Plan


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Aug 02, 2019

By : Bajaj Allianz Life

The only thing that makes early retirement planning different than conventional retirement planning is time. Many of us make an early retirement plan to follow our unfulfilled dreams or hobbies. For many, early retirement might happen as early as in one's 40s. All one needs is advance planning with wise investment decisions to guarantee that post-retirement, one has the financial means not just to live independently and contentedly, but also to achieve all their life goals.

This is how one can start planning early-on for their early retirement goal:

Determine the retirement savings

First, it is essential to calculate the retirement corpus one would require for a stress-free retirement. The retirement savings should weigh in one's current expenditures, future medical expenses, life expectancy, the number of dependents and the anticipated rate of inflation. One can also use online retirement calculators available for estimating the corpus required for retirement.

Estimate the time period for building the retirement savings

The second step of early retirement planning should be to estimate the tenure of building the retirement corpus. It is wise to start saving towards retirement early in life as it will enable the build-up of a larger corpus. Also we are usually better placed to take risks in our early earning years, and can thus invest in market-linked products that have an affinity towards equities. Since equities are known to provide higher returns in the long run, it helps an individual build a large retirement pool.

Invest in the right plan

The best way to secure one's retirement is to choose a pension plan that helps one meet his/her retirement goals and at the same time, considers factors like inflation and one's risk appetite. Investment in ULIPs is one of the preferred choices, as it is an enduring product and it allows you to invest in a range of funds like debt, equity, or a blend of both. If one desires higher returns in the long run and has a high-risk appetite, one can invest in equities. On the other hand, one can opt for a combination of equity and debt which optimises returns and curtails risk.

Another important thing before zeroing in on the right investment plan is to check the products online. It is imperative to comprehend the features and benefits and the past performance of funds associated with the plan to decide which investment plan to opt for.

Factor in health expenses

Another important factor that must be given due consideration for retirement planning is healthcare expenses. As one advances in age, healthcare expenses also increase. So, medical care and potential ailments must be considered judiciously while deciding on the corpus required for retirement. This will ensure that healthcare expenses don't drain one’s retirement savings.

Have a regular income post-retirement

It is critical to plan for a regular post-retirement income no matter how big one's retirement savings is. This will ensure your retirement corpus doesn't drain out early. A part of the retirement corpus or the whole amount can be used to buy an annuity plan or a whole-life ULIP that secures a lifelong regular income.

Review your retirement savings regularly

Finally, a periodic review of one's retirement fund helps to focus on their retirement saving goals. An individual's lifestyle and ambitions continuously evolve from one life stage to another. For this reason, it is essential to constantly evaluate the investments made for the retirement fund. If you think that the retirement corpus is lagging, the investments can be increased or altered.

Early retirement can be enjoyed only if it is planned efficiently to ensure that an individual along with his/her loved ones, leads a comfortable retired life. And for that, building a large corpus is essential along with the tools that will make the corpus last longer. Hence, it is very important to opt for the right investment plan which will help build the retirement savings at the accrual phase and give beneficial returns when the time comes.

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