EARLY RETIREMENT IN INDIA: – A Dream Worth To Work For

Early retirement may sound like a dream, but there are more and more people who are trying to retire early as part of the FIRE movement. If you haven’t heard of the concept before, FIRE stands for Financial Independence, Retire Early.
There are many different versions of FIRE, and the most important factors to decide your FIRE can be…
– Being debt-free & Retiring early
– Quitting your regular job to work a less stressful job, and so on.

Is EARLY Retirement a GOOD IDEA?

There are many reasons why a person may want to reach early retirement or financial independence, such as:
• Pursuing a passion without worrying about making an income
• Having more time to travel
• Having freedom
• Spending more time with family and those that you love
• Lean towards spirituality or religious activities, or any social cause.
Weather early retirement is a good idea or not, it depends on Individual’s choice of the kind of life they are living now vs. what they want to live. The kind of work they are doing now and the level of their interest and stress in that work vs. the kind of passion they have been dreaming for. So, if one can secure future through early savings and have a passion to follow or any other part-time job to try, or one is happy to spend time with family, then Retire Early is certainly a good idea!

Right Age for Early Retirement?
There are many retirement stories on Internet about people retiring at the age of 30 and travelling the world, but in our Indian Perspective it looks like a DREAM to retire such an age. People in western world may worry less about their kids after their high school and we could not stop worrying about our children till their marriage or sometimes even after. But in my opinion, it’s our children’s life they have to build, you just need to give them support for good education and so when your children graduate, that should be the actual age of retirement, that too only if you are debt free by that time without having any further liability which is to be paid by you. Ideally it can happen anywhere between 45-50 years of age so I advise it a right age for Early Retirement in India.

Abraham Lincoln once said “And in the end it’s not the years in your life that count. It’s the life in your years.” And hence, you may choose your retirement age accordingly.

How Much Corpus Is Required?
As per Forbes Advisor there are 2 rules for deciding this factor, which are more or less same..

1. The 25X Rule>> Means whatever is your annual spending now, you have to save 25 times of your annual spending to get retired. For example, if your monthly spending now is rupees 1.5 lakh, then you can calculate it as Rs. 1.5 Lakh * 12 * 25 = 4.5 CR.
2. The 4% Rule>> Another Inverse method is to believe that Retiree can withdraw 4% of their portfolio/Saving annually so if you have rupees 4.5 CR saved, then 4% withdrawal of the same can give you rupees 1.5 lakh per month.
You may save a little surplus to what is calculated as to bear with any capital Gain or Tax liabilities, so in that example let’s assume Rupees 5 Crore is the Corpus required to Retire.
But in Indian Perspective, we have liabilities like children marriage etc and hence we have to keep additional 1 CR reserved for that assuming children will be earning themselves by that time to bear any additional marriage expense as per their choice. Indian females are habitual to keep buying ornaments for future saving and I assumed most of that would be passed on to children in their marriage to minimise marriage expenses on Gold.

So in my opinion Most Secured and the Best Figure to declare an EARLY RETIREMENT for an Urban Living Person having approx. Rs. 1.25 – 1.5 Lakh/month spending is 6 Crore Rupees. This can give you enough to live happily, additionally you may have Income by selling any surplus property you might have bought as a part of your investment Plan, and also can obtain some Income from Property you might have Rent Out as a Surplus Income to Support your Decision by increasing your Comfort Level. You may still pass our Properties to your children as an Inheritance.

What Planning We Need? Any suggested Investment plan: –

Follow Three Golden Rule for that…
1. Start As Early As Possible.
2. Be Regular to your Savings and do not inflate your lifestyle if your get a Raise, let the surplus go for Retirement Saving.
3. Build a Balance Investment Portfolio like 40% Equity, 30% Mutual Funds (50-50 on Equity & Debt), 30% Fixed Deposits, and revise it every 5 year to reduce Equity and Increase Debt-Funds or F.D’s as to minimise risk taking while your age grows.

What You Can Do After Retirement?
Follow your passion. If you decide to retire early because you do not like your job rather you have a passion which you are unable to follow, most probably you will be unhappy after retirement. So, if you have a passion to follow or just want to spend time with family which can make you happy, then you can retire early.

Finally, I would say don’t just think in terms of numbers. Get clear about what you really want to do with your life, what your dream life looks like, what will make you feel like you have a purpose, what you want to be able to look back on at the end of your life and feel proud of, and then decide what you’re willing to give up to make that happen. Doing that exercise will help you figure out much more quickly how much your new life will cost and how much you can afford to save now, but best of all you’ll have the motivation to do that saving if you have already invested the time in forming that solid vision for yourself.

Best Wishes & Happy Retirement!

– Shri Pal Singh