Want to retire early at 45? Let’s get practical

If you are planning to retire early, please accept that you’re not the only one. Are you inspired to retire early or is it just a vague desire? If you are influenced by the FIRE movement – Financially Independent Retire Early, please do not get too carried away. Retirement is not just about having sizeable retirement corpus. It’s a phase which demands much more. This article is intended to share what it takes to retire early and lead a relaxed life thereafter.

In India, usually people retire by 58 or 60. As Certified Financial Planner in Kolkata, we have come across people who are of the opinion that they wish to work as long as they can (even beyond 60 or 65). On the contrary, people also approach us with the objective to retire early. It’s important to understand how one approaches the retirement phase. With the FIRE movement, what should really matter? Is early retirement linked with your financial independence? Let’s dig deep.

One question you might have when you think of early retirement is, “Can I afford to retire early?” As SEBI Registered Investment Adviser in Kolkata, we would urge you to ask yourself the following questions:

1. Why do you want to retire early?
2. In which stage of life are you in?
3. How much retirement corpus do you need to retire? How much have you accumulated till now?
4. How would you like to see yourself in retirement?
5. You want to do specific things in life after retiring from work-life?

Planning to retire early? Consider the practicalities

What’s driving you to retire early?

Retirement is not an event. It is a transition. If you can convince yourself with the reason why you want to retire early, you are good to visualize further.

Today, early retirement is no longer the stage when you will stop working forever. It’s about the stage you’ll no longer need to work for money. As practicing Fee Only Financial Planner in Kolkata, we get to listen to people about the reasons for early retirement. It revolves around the following:

• To get involved with an NGO (and work for a cause);
• To go back to one’s hometown and be at peace (get away from the hustle and bustle);
• To start own business (but not to depend upon the business income in retirement);
• To travel frequently (and not restrict yourself to two vacations in a year);
• To pursue hobbies and interests (which can be gardening, playing musical instruments, reading and writing, etc.);
• To spend quality time with family and relatives; etc.

Yours could definitely be something different from the above.

Threats of retiring early

Situations may turn out to be unfavourable at times. Expectations may not match the reality. You may have to adjust with the one or more of the following scenarios:

• You’re not able to spend time with your family the way you thought of.
• Your friends and colleagues are still working. They are not able to give you the time.
• The business idea you had, it may not be appearing as happening as you imagined it to be.
• After shifting to your hometown/village, you’re not able to adjust with the lifestyle.
• You might suffer from identity crisis.
• The hobbies you decided to pursue, they are not exciting you much for long.

A real-life scenario of a young couple who is planning to retire early

Rishi, 32 (name changed) and Anita, 30 (name changed) has a strong desire to retire early from the corporate work-life. Looking for a Financial Advisor in Kolkata, they approached us this year. Their outlook is to plan for their early retirement and figure out how it was fitting alongside their other commitments.

Their definition of early retirement is that both of them wish to retire from their corporate work-lives by 45 and start a home decor business. They are having specific commitments which they wish to fulfill in the next 10-12 years. They are willing to give themselves the time to prepare for their home decor business. It is something both of them want to do.

Basic goals they are having:

• Buy a car in 2 years.
• Extend family in 3 years. Thereafter, plan for child’s future. Complete making provision for child’s primary and higher education by 45.
• New house purchase by selling one ancestral property.
• Retire from corporate work-life by 45.
• Start a home decor business in their late 40s.
• Create their retirement kitty by 45 because they do not want to heavily depend on their income from home decor business.

Their genuine curiosity was, “Are these milestones feasible enough?”

The journey

As Financial Consultant in Kolkata, we believe that preparing an all pervasive Financial Plan and implementing the action plans is the starting point.

Their journey with us has just started. We have started our financial planning processes. Multiple discussions with them are giving us unique insights to consider. Various factors which are foreseeable in nature are to be taken care of. Also, there will be few aspects which may be a bolt from the blue. As Qualified Personal Finance Professional in Kolkata, we feel that our prime role is to prepare a family towards financial wellness. The journey is long and engaging.

Ultimately, hand-holding process to achieve your financial goals is all what you need.