As exciting as it sounds, early retirement is not easy. It takes more than just the willingness to retire early.
Having said that, early retirement comes in various shapes and sizes, all of which affecting all aspects of your life. So, here are some of the steps that you can take in during your retirement planning.
Set clear your idea of early retirement:
The retirement planning process is different for everyone. Hence, you must define what early retirement is for you. Once, you have that in place, it becomes easier for you to plan your finances, buy relevant retirement policies. It also helps you plan your today to build a better tomorrow.
You can also keep some options open for other activities such as pursuing your hobbies or travelling or taking up new courses, etc. But, to ensure that your retirement is fruitful in both – monetary and otherwise, you need to start planning and defining the time period from today itself.
Set your target number:
Once you have placed a timeline for early retirement, then it’s time to establish how financially stable you need to be to make this a reality.
Ideally, it is best to have 25 to 30 times your expected income saved or invested. Additionally, you need to have a minimum of year-long expense in cash. This can be a tricky part to calculate; hence, seeking help for a financial advisor may not seem a bad idea now. You can also invest in some of the retirement plans in India. Check which retirement plan suits your needs and lifestyle and buy the same.
Set your income channel:
You may have your retirement policy and cash on hand but, given the liquid nature of finances, you must have other channels of income. Many financial advisors too, will ask you to take up a side hustle to diversify your income streams. These income streams will generate passive income for you. Building a passive income will help you meet your monthly expenses and safeguard your investments. It also offers you more flexibility and enables you to reach financial independence quickly.
Set your investments for the leftover cash:
Once you have generated a passive income, there are chances that you may earn more at times. This extra monetary corpus can be used to make further investments. You can also leverage your retirement policy with this income to reap more benefit from it.
Retirement planning, especially an early one requires immense time and discipline along with proper execution of your plan. Sacrifice is inevitable and crucial, too, if you wish to retire early. However, that’s not all either. Adequate planning can get you to your goal.