InvestorQ : I am planning to retire early, what are the things that I should keep in mind?
Neha Samdani made post

I am planning to retire early, what are the things that I should keep in mind?

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shivangi Arora answered.
1 year ago
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If you are planning to retire early, this means you would stop working early. Simply put together, your investment will have to earn at the double rate, one to compensate for the early years that you won’t be working and second, for the period you will not be working, so your investment returns will help you make a living during that period.

Here are the few things that should be kept in mind, if you are planning to retire early:

1) You need to invest more. If you are taking retirement early, this means you would stop earning at that age, so you will have to put more money into investment. It will help you compensate for the further years.

2) Plan for a longer retirement. If you retire at the age of 60, you will have to plan your life until 90, but if you retire at the age of 40, you will have to plan for the next 50 years. So, plan to keep in mind all the time value factors for those 50 years.

3) While you are planning, take reasonable assumptions or conservative assumptions: This means, you cannot assume higher returns for your post-retirement returns, because, in that period, your most investment will be in fixed-income securities so you cannot expect a 12-15% return. In that case, you have to line up your equity of earlier years to fetch higher returns.

4) Your retirement portfolio should grow in the early years. This is important because, during that period, your earnings would exceed your expenses. And, during the retirement period, you will have more expenses than your income and you would be entirely dependent on your portfolio for income streams.

5) One thing that is most important while planning your retirement is to provide for the health expenses. Yes, you won’t be having any other income source in the later years. So, if some medical emergency comes up, you will not be left with any choices other than utilizing your retirement fund if you have not planned for an emergency. To simply put, you should buy health insurance that could cover up any medical emergencies.

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