A Plan For Early Retirement Is Not Always A Choice – It Can Be A Compulsion

Have you thought of retirement as a phase of your life? You must have got a sense of your ideal retirement age. You should have made certain plans based on that timeline. Do you have a retirement plan in place? If yes, that’s great! Now, imagine a situation which compels you to retire early from work-life at an age you never wished for. How would you face this situation? A plan for early retirement can address this concern to a great extent.

Early retirement may not always be a choice – You may have to retire early out of compulsion. Yes, the thought of retiring early out of compulsion may unsettle you, but, it is a reality in many cases. Forced retirement comes with extra set of challenges. As Certified Financial Planner in Kolkata, we believe that if you have a plan for early retirement, you can address your unique risks up to the hilt.

Situations which may trigger your plan for early retirement

There are situations which you may anticipate. On the other hand, one may face scenarios which are accidental in nature. He/she may not get the required time to prepare for the same, both mentally and financially.

Usually, situations where anticipation is somewhat possible:

• As practicing Financial Advisor in Kolkata, we hear that aging people in Information Technology industry are not able to adapt to the emerging technological environment. They are feeling the heat. Companies are finding it productive to hire young people (late 20s and early 30s) in a cost-effective fashion than to re-skill aged employees (late 40s and early 50s). In a way, they are forced to consider a plan for early retirement. This trend is very much visible nowadays.
• Salaried people are no longer spending 8-10 hours a day at work. Total work-hours have increased. The demarcation between work-hours and personal life has just faded away. The risk of burnout becomes one of the biggest reasons to plan for early retirement.
• If you are dissatisfied with your career, you may start contemplating an early retirement plan. If toxic work culture is the main trigger, then early retirement without a sound retirement plan can be challenging.
• Self-employment can be another trigger. May be you have desire to start your own consultancy or a small business or even join in your relative’s business. This can be termed as partial-retirement. In this instance, one should consider a structured retirement planning approach that will lead him/her towards a peaceful retirement.

Situations which are beyond our control:

• Companies are downsizing to cut costs. Less productive employees are being fired without prior warnings. Aging people (based on industry) may not get suitable re-employment elsewhere due to multiple factors. A sudden layoff may force you to take retirement from work-life.
• A paralytic stroke or a severe road accident may make someone temporarily or permanently disabled. In these cases, one may not be in a position to go back to work ever. He/she may be living dead. It may also happen that he/she may not be able to continue/rejoin the previous work. Thus, he/she may have to settle with a work (due to disability) which is not as rewarding as the previous one. Running a family in such cases is tough. Health issue due to sickness or accident can be a critical reason to retire early.

How to consider your plan for early retirement

As SEBI Registered Investment Adviser in Kolkata, we firmly advocate that one-size-fits-all approach doesn’t hold good in financial planning.

When it is about a plan for early retirement, approach will depend on the scenario:

• Is it a pre-plan? Is it your conscious decision to retire early?
• Are you forced into retirement at an age you never thought of?

If retiring early is your choice, then a structured process to plan for early retirement is the ideal way forward. The earlier you start financial planning and implementation of the Financial Plan, the better. Rationality should prevail during decision-making. This will make the transition period less bumpy. You should be mindful of the fact that your initial phase of retirement will be more active than normal. Visualising your retirement phase will provide insights which are pertinent for a relaxed distribution phase.

When you have to accept retirement at an age you never wanted to leave your work-life, it’s a shock. The idea is to recover from the setback, both mentally and financially. It’s normal to feel lost. You need to figure out the impact of sudden retirement and set action plans to adjust with the unforeseen life-event.

Be ready

You’re better prepared when you are planned. A life-event can abruptly change your environment, your status and what not! One needs to be practical and acknowledge the fact that early retirement is a reality. As Fee Only Financial Planner in Kolkata, we advocate that scenario planning is a key step.

Suppose, you have a Retirement Plan and you’re following the same diligently. You feel that you’re set to retire at an age you want to, say at 58 or 60. What if a life-event, say health issue forces you to retire at 45/50? Your retirement phase increases by 8-10 years. Not only that, what about your commitments that are still unfulfilled at 50? How will you manage your finances?

The feeling of “I don’t know what to do now.” is really terrible. As Financial Consultant in Kolkata, we urge you to plan rationally by considering the practicalities of life.