3 signs that suggest early retirement is just a dream

Everyone dreams of getting rid of the daily alarm clock and live a life on their own terms with no major responsibilities and enjoy rest of the life to the fullest. However, spending decades in retirement can be a dream and you may still need to work if you have already ignored or are currently ignoring these three major signs.

1. No solid retirement corpus
Retirement can prove to be one of the most exciting phases of life, but it can also be termed as one of the most expensive phases. Expensive phase as in there would be low to no regular income. So, to enjoy your retirement phase you need to have a solid retirement corpus in place and as you may be planning for early retirement you must have an even solid corpus for retirement as the retirement phase would be bigger than if you had taken normal retirement. Say for instance, your current age is 30 and the normal retirement age is 60. However, you wish to retire at the age of 50. Currently you have expenses of Rs. 30,000 per month which is increasing at 7 per cent inflation in pre as well as post retirement phase. It is expected that in post-retirement phase you would earn 9 per cent rate of return with your life expectancy being at the age of 85. So, in case if you retire at the age of 60 then you would require Rs. 5.48 crore. However, if you decide to retire early at the age of 50 then the corpus required is Rs. 3.58 crore. It may seem that retiring early requires less corpus. But if to accumulate this corpus in normal retirement, you have 30 years to accumulate and in early retirement you have 20 years to accumulate. You may still think that 10 years is not a big deal. However, if we see it in terms of monthly SIP required then you would have to do SIP of Rs. 15,500 per month if you are taking retirement at the age of 60, but if you are taking retirement at the age of 50 then you need to do SIP of Rs. 36,000 per month until you reach your retirement. Apart from this your retirement corpus may also increase based in the goals that you have during the retirement phase. Say, you wish to travel world or need to keep some amount that would take care of your medical expenses as well as medical insurance burns your pockets. So, it is important to have a solid retirement corpus if you wish to retire early.

2. You rely only on retirement benefits
If you are a person who is dependent only on the retirement benefits available such as EPF (Employee Provident Fund) corpus, NPS (National Pension System) corpus, etc. then it would be difficult for you to retire early, the first reason being you won’t be able to accumulate a fair corpus and second you won’t be having any other investment corpus to cover the shortfall of retirement corpus. So, you won’t be left with a choice but to work till the normal retirement age of 60 or if required, to work even further. So, to retire early or even to retire at the age of 60, keep in mind that social security won’t suffice your requirements. So, it is important to invest in various asset classes to make your retirement a wonderful journey.

3. You have a health issue
Today, it becomes really important to take care of your health as the medical expenses are increasing and can cost you high depending upon the illness and its treatment. Not just now but even in retirement phase. In retirement phase, even if your overall health is good the health insurance becomes expensive. However, if you have health issues then you should account for the medical expenses for the same even in retirement phase. So, if you have health issues then either accumulate more by the time you attain desired age of retirement. If not then you may have to give up the idea of retiring early.