Tips to retire early

Though at first, retiring early might seem to be difficult but it is not impossible to attain it. Financially Independent, Retire Early (FIRE) is something that is catching up the pace now while, more and more people are thinking of retiring in their 40’s and 50’s. This thought is often led by the dreams that one needs to achieve, which can be travelling around the world, pursuing passion, relaxing or engaging oneself in philanthropic activities. Everyone wishes to achieve financial freedom but if you feel you are financially independent now, it does not really mean that your retirement would be same as well. Therefore, if you wish to retire early, then start planning for it and take actions according to the plan. Having said that, here are a few tips that will help you in attaining your goal:

Tweak your budget

Tweaking your budget would help you to have more savings that you need to invest in order to achieve the required retirement corpus (considering you are retiring early). Unfortunately, you cannot do impulsive shopping or spend on an exotic vacation and retire early. For early retirement, you might need to sacrifice on some of your lifestyle expenses. Therefore, revisit your budget and tweak on things that you won’t be doing from now onwards, in order to increase your savings.

Calculate retirement corpus

Retirement corpus is the amount that you would probably be requiring in your retirement period. Now the thing here to remember is that, retirement corpus is just a ballpark figure. The actual spending might differ. It might even cross the calculated retirement corpus. Therefore, it is important to review the same annually. This will help you to capture the changed spending patterns and also to adjust as per the additional expenses that you plan to have in retirement. Also, it is crucial to account for health care cost while calculating for retirement corpus. This is because as you become old, the chances of illness increases and even the cost of health insurance get abnormal.

Invest towards retirement corpus

Only saving will not help you in achieving your required retirement corpus. Hence, to achieve your retirement corpus and in turn retire early, you also need to invest towards it. Having an aggressive portfolio that is more tilted towards equity investment is advisable. This is because the time required to achieve your goal is less. Therefore, it is better to invest as least 60 per cent in equity mutual funds and 30 per cent in debt mutual funds as well as 10 per cent in gold mutual funds. Also, do not forget to re-balance your portfolio annually. If in case, you do not have enough time to dedicate or you do not have the required knowledge for it then, it is always better to seek expert help.