Plan for an early Retirement

The idea of an early retirement is as exciting as it sounds, but the party ends there. To achieve an early retirement you need more than luck and by luck it is never meant that you have to live that long. The good news is most of us are going to live long, but that also is bad news.

Retirement planning will help you manage your funds pre and post retirement keeping in view your life style and retirement goals. Retirement planning is not a simple things its very long and hard work but then at the end of day it will give you the Golden years you and you only deserve, remember  “It's the hottest fire that make's the hardest steel.”

The demographic dividend over the next few decades is expected to spur India’s economic growth. But they are going to get older, living longer and paying for it. Early retirement may be a distance dream for most who fail to take certain simple steps as discussed below.

So let’s get set and get started for a step by step analysis of the factors that are most important in the success of a plan to retire early.

1.       The first and most important thing is the realization of the impact of a plan and no plan for retirement. The retirement period can be as long as 25-40 years. Today retirement or retired doesn’t mean what it used to. To retire in style is getting harder than ever. You may have to plan not only the expense but also what you will do with the time you have at your disposal. If not planned with the help of a professional planner it is possible there won’t be any retirement at all. Never put off to tomorrow what you can do today.

2.       The second most important thing to consider after the realization for a need to get a retirement plan in place is underestimating how long you will leave. The advance in medicine will make you live as long as you can, so to plan for retirement you must plan for a reasonably long period of retirement.

3.       The third important thing is underestimating the effect of inflation. Inflation is the biggest risk to any retirement saving. Inflation is the sustained increase in the price of goods and services over time. It will affect your expenses on food and health care beyond imagination, so the failure to consider it may result in the risk of lasting savings before you last. Related to this factor is the decision to position investments for growth, a too conservative investment strategy can be just as dangerous as a too aggressive one.

4.       Then most often we commit the mistake of starting to plan for retirement too late. Not saving enough and not saving early enough can derail the best of retirement plans. The best way is very simple, save early, save often and save consistently.

5.       Then the most common of all mistakes that most of us do is to do it yourself. Going alone on a plan for retirement will expose you to missed investment opportunities, sloppy planning and lax saving schedules. Retirement planning is a serious business and the assistance of a professional retirement adviser is going to make the plan and the process of executing the plan more efficient and manageable.

6.       Some other things that will help you in better retirement planning and which your retirement adviser will take care are, making a portfolio with right asset allocation according to your risk profile and goals, taking advantage of free money, power of compounding, bucket investing, diversification and using enforcement tools.

More than 80% people in our country fail to plan and for most of the other 20% the plan fails because of not taking assistance of a professional retirement adviser. One out of every 3 elderly Indian is already living below poverty line. It’s high time we take this issue seriously and take right decision in time to take care of retirement period right at the start of our career, because we may have to cater for a period longer than our earning period and that is a real challenge. It's better to do the right things wrong, than the wrong things right.

I wish to end this article with, “The person who has no goal, who doesn't know where he's going, and whose thoughts must therefore be thoughts of confusion, anxiety and worry—his life becomes one of frustration, fear, anxiety and worry. And if he thinks about nothing... he becomes nothing. So think big...start small...move fast.”