How to Retire Early - Financial Moves You Must Take

 

So many of us don’t want to work till we are 60 but want to enjoy life sooner than that. We wish to retire early and devote time to ourselves, our family and the things that we love. But it’s easier said than done. This requires careful planning and methodical approach to build a retirement fund to allow you to retire earlier. We need to spend our income and plan on saving what remains in a judicious way so that we can plan for the future better.

Let’s look at a few moves you can make to retire early:

1. Invest in SIPs and ULIPs-

You need to create wealth over a long period of time. Fixed deposits and Savings account are good to save money but don’t have a high rate of returns. SIPs and ULIPs will help you minimize risk due to fluctuations in the market while helping you build wealth at the same time. The returns are higher due to compounding interest accumulated over a period of time.

2. Invest in Pension Schemes-

You will have to depend on your savings after retirement to for your daily expenses. But since there won’t be a steady income anymore, your savings will eventually dwindle. You can avoid that when you invest in a good pension scheme depending on your age of retirement. If you wish to retire at 40 with a life expectancy of 75 years, you need a pension scheme that will give you benefits for 35 years, giving you enough returns to fulfill your daily needs.

3. Increase savings-

We usually save what is left at the end of the month in our bank accounts. But if we wish to retire early, we need to start keeping a bigger portion of our income aside at the start of the month and manage our expenses around what is left. This can be done with careful and methodical planning and approach.

4. Stay Debt free by paying off your debts-

You cannot have your EMIs eating into your savings after your retirement, especially if you want to retire earlier. Pay off all your loans in a prudent way. You can pay off more amounts at one time, or save and pay off a lump sum every year. This will reduce your rate of interest on the loan as well. It will help you knock off your loan sooner than later and help you then save your salary after you are debt- free.

5. Create a Budget-

You need to create a monthly budget of your expenses instead of random spending. Carefully plan your house hold expenses, the amount that goes into your bills etc. You can also keep a budget for your spending on movies and dining out so that you don’t overshoot it. This activity will help you spend less and save more instead of spending mindlessly.

HDFC Life offers a bunch of savings and investment plans that will allow you to plan an early retirement at ease.

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