Early Retirement Guidelines


Often the advertisement related with retirement planning or retirement benefits shows old gentleman and ladies having a relaxed life, vacationing, strolling by seaside or playing golf. Investing is not enough to lead such a relaxed and independent life but investing early is the key of a successful planning. Research has shown that that the earlier you start building your retirement corpus the lesser is the percentage of salary you need to save (and more benefits!).

On an average you need to save 9.4% of your salary (or income) at the starting age of 25 (to financial planning) to get an income equal to 70% of your salary. The percentage becomes 13.3% at the starting age of 35, 20.4% at the age of 45 and 39.6% at the age of 55.The figures clearly shows that intelligence lies to plan and start early.

The most important part of retirement planning is to know when you can retire and when you cannot. It simply means you should realize when you will have enough corpus which will not compel you to be in an income generating activity (especially when your age will cross 60). While you are calculating your retirement income, always keep in mind three factors, i.e. when you wish to retire, how long the savings or corpus should last and what kind of lifestyle you wish to lead post retirement. Factors such as price rise, inflation and increased interest rates should also be kept in mind while retirement planning.

Experts say that a basic rule for retirement planning is to save 15% of your income regularly for a prolonged period of time would give you good returns upon retirement. If you start later you need to invest a higher percentage of income to get the same return. The importance of early retirement planning should be realized early because of increased life expectancy, advanced healthcare benefits and micro families.

All these factors demand larger retirement corpus which should last longer and would able to sustain your lifestyle. Starting early also means to save more due to longer working life and your savings gets compounded and also you can rectify any mistakes in your planning. No matter when you start, always maintain liquidity and growth in your funds (for contingencies and safety).

So plan and start saving early because a golden period is waiting for you!


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