Ways to plan a stress-free early retirement
1. Start as early as possible
Starting early gives you an upper edge when it comes to building a savings corpus. The longer you wait to begin saving for retirement or investing in tools that will build your wealth for a comfy retirement, the less likely you are to leverage the power of compounding. Compounding is essentially a factor of time more than anything else, and the more you wait, the less time you allow compounding to work its magic on your investments. Another reason starting early is beneficial is that later in life you may encounter financial emergencies that require dipping into your retirement corpus. However, early on the chances of experiencing these emergencies is rare. You can amass a huge and untouched corpus the earlier you start.
2. Prepare for potential contingencies
Contingencies are unexpected demands that require your immediate attention. Your retirement planning should account for contingencies that may afflict you later in life, be it in the form of a genetically passed down critical illness or an economic crisis. Your retirement corpus needs to be enough to support a comfortable lifestyle while also covering the costs of these contingencies. The ideal way to a stress-free retirement is to prepare for these contingencies like they are bound to happen. Naively hoping for the best can be costly, but over-preparing never hurt anybody.
3. Aim to beat inflation
Retirement cannot be stress-free without planning to cover inflation costs. The rising cost of living is one of the factors behind why a savings corpus will simply not cut it for your retirement, especially if you wish to retire early. You need wealth creation tools that are either as long term investments or short term high-risk market returns. Your financial planning for early retirement is incomplete without a wealth creation element to it solely because building wealth will account for potential inflation costs. This is why financial advisors suggest going beyond a simple pension plan and also diversifying one's portfolio with financial instruments like equity mutual funds, ETFs, and the like.
4. Keep debt to a minimum
Paying off debt in time is part of the essential financial hygiene everybody should be practicing, irrespective of whether they are retirement planning or not. However, debt can dent your savings and prevent you from growing your wealth at the pace it needs to for a comfortable retirement. When you are in any kind of debt, ensure you pay it off as soon as possible. A heavy interest is applied to outstanding dues that haven't been paid in a long time. Retirement is a time in your life when you need not be fretting about these debt payments. Hence, it is vital to ensure you pay off debts before they grow to monstrously costly amounts.
5. Get to know your investment option
Learning more about your investment options is key in financial planning. From classic pension plans to unit-linked insurance plans with a focus on retirement planning, you have a plethora of options on the market that can serve as your future retirement income. One such plan is the HDFC Life Pension Guaranteed Plan. This plan is a straightforward way to give you the annuity you wish to receive as yearly, half-yearly, quarterly, or monthly pay-outs. You simply have to pick the purchase price you prefer to pay as premiums or choose the amount of annuity you want to receive as pay-outs and the HDFC Life Pension Guaranteed Plan will offer them to you as retirement income at the frequency you desire.
The Bottom Line:
If you wish to retire early, the key is to start now and follow the steps mentioned above. This is a sure-fire way to reduce your stress and ai in retiring earlier than the average age. This is where the HDFC Life Pension Guaranteed Plan comes in. This is a single premium pension plan which offers guaranteed income*at regular pay-outs for life. You can start paying your premiums towards this plan and begin or receive your annuity immediately. Alternatively, you can defer by a few years until you wish to receive a retirement income. Hence, stress-free retirement savings are assured with the HDFC Life Pension Guaranteed Plan.
* The word "Guaranteed" and "Guarantee" mean that annuity payout is fixed at the inception of the policy
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"The thumb rule for retirement planning is - the earlier you start, the more you save. However, with age, your priorities change too. So, you need to factor in the cost of living in the present vis- a -vis future."
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