Different people take retirement differently and plan their retirement on different stage of life. Planning a retirement needs proper attention and if someone plans out an early retirement, they must not mind putting some extra effort. One might wish to retire at 45 whereas most people mull on this issue after 55 or 60 years of age.
Under today’s economic growth, higher salaries and various investment choices have resulted into too many early retirements. It’s entirely your choice to retire at 40 or 60 years of age but retirement at both the stages are different to each other and have their pros and cons.
At the age of 40, you might have several commitments to fulfil and moreover, you have lesser time for accumulating retirement savings. On the other hand, it will give you a chosen lifestyle.
Retirement at 60, in most cases, is obligatory under the policies laid out by most companies.
Here are few basics for early retirement and how you can make your retirement rich in financial terms.
Consider a retirement age: This is the first and foremost step in planning an early retirement, as you will get a fair idea on savings pattern.
Life expectancy: Estimate how many years you are going to live post retirement, though it may sound difficult but by doing so, you can have an idea on the size of corpus.
What retirement meant for you: Two different persons will want to enjoy their retirement in different ways. If one plans early retirement to pursue other dreams, other may choose it for the world tour. As living two entirely different dreams varies on expenditure, you will need to mull on retirement plans that are poles apart to each other.
Now you will have a complete idea on how much savings you are going to need in your retirement. Here are a few steps that will help you in retirement savings.
Start early: If you are planning an early retirement, no way you can afford to start savings latter. Make sure to start your action as soon as income starts flowing in. Ensure that your contributions are without any gap, as this may prove burdensome to re-start after a gap.
Start small: There is no need to invest once in a big chunk, you must start savings early, even if it means small contributions. Your small contributions will one day return into big pension pot.
Increase the size of investment: Starting small does not mean you should get stick with it forever. Your savings must be proportionate with the income; it means that when your income is up, contribution, too, should be higher. Make a goal and work accordingly.
Wise investments: While making investments, you must look to balance the risk and return factors. In the early years of working life, invest in equity and later modify it for balancing debt instruments.
Buy a house: A house gives stability to your life. Make sure to buy a house, does not matter whether it is small or big. It will also help you in the later years to withdraw equity in the form of equity release scheme from the house.
An early retirement can offer a chosen lifestyle and help in pursuing your dreams, but to have a successful early retirement, you must chalk out plans and stick to it for the entire working life.