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The key to retiring early: 3 things you need to do

Early retirement, in India, always meant VRS (voluntary retirement), which was focused on getting your gratuity and other funds at a younger age.

ET Spotlight|
Updated: Sep 13, 2018, 12.01 PM IST
ET Spotlight
Imagine this – Its 8 am, you leisurely wake up, enjoy a healthy home-cooked breakfast, hit the gym, lend a hand in some household chores, relish your lunch and a small nap after. Your evening is consumed with your family, as you have some memorable conversations, complemented by the giggles of your kids and partner. Stress is non-existent and calm is in abundance. Seems like a dream, doesn’t it? This is the reality that inspires millions worldwide to join the FIRE movement. FIRE or financial independence, retire early; has been a mantra that people in the west have been following for quite some time. Like any trend that begins in the west, this too has reached India, as more and more professionals choose the path of retiring in their 40s, and cutting ties from the corporate whirlwind.

Early retirement, in India, always meant VRS (voluntary retirement), which was focused on getting your gratuity and other funds at a younger age. However, times are changing, as more people are planning for an early retirement, so they can enjoy life, outside their office cubicles. The idea of FIRE is still new in India, and not many are able to grasp the concept. But it is something that many millennials are attracted to, for various reasons. They say that the real luxury is time, and this is the ideology that makes FIRE a way of life. People who follow the FIRE movement are looking to be present, rather than getting luxurious presents. It is not a rosy choice, but a lifestyle which will give you more time with your family, friends and yourself. So what is the secret to an early retirement?

The principle of FIRE

The key to retiring early is having ample bank balance and investments that can support you. While most people decide to save 30% of their income for their retirement, people who aim to retire early only spend 30% of their income. The remaining 70% is put into various investment alternatives as well as a savings plan. The secret to successfully retiring early is learning to live below your means. While most people spend thousands in the weekly meals and luxury car or homes they don’t necessarily need, FIRE aspirants choose to live a simpler life, with economic cars, small homes, making sure that they are not piling up their loans.

What you need to remember

While the idea of retiring 20 years before the retirement age is attractive, it is important to remember that it is a minimalist life, low on stuff and high on time. While you can comfortably retire in your 40s if you save and invest 70% of your income, this life will not be heavy on luxury. For people who opt for this lifestyle, the only new buys that occur are to replace the old goods that are not working. The idea of social status and luxury living does not usually go well with the FIRE movement practitioners. However, it does allow a much more down-to-earth living experience, with quality memories.

Where to Invest?

While there are many who consider seriously opting for this lifestyle, investing in the right instruments is key to live a stress-free retired life in our 40s. One financial instrument that needs to be on your list has to be a term insurance. This security net would protect your family if something untoward happens to you. The HDFC Life Click2Protect 3D Plus plan is an affordable online insurance plan that provides a comprehensive security to you and your family.

In addition to this, investing in high-return market-linked instruments is crucial in building a good investment portfolio. While directly investing in the stock market involves higher risks, opting for plans like ULIPs provides a safer alternative, while continuing to reap the benefits. The HDFC Life Click2Invest – ULIP is a great investment tool that offers market-linked returns, at minimal charges. The tax-benefits and exemptions of this scheme are added benefits of making this choice.

Choosing the right financial instruments is the key to having a stress-free retired life in your 40s. With a proper financial back-up, and investments that give times returns, living a life away from the corporate offices, can become a reality. The FIRE lifestyle has intrigued many, who are more interested in the simplicity of life, and spending time with family, than being over exhausted with work. So if this is the kind of life that you are looking for, start saving and have the back-up to be happily retired at 40.

(This article is generated and published by ET Spotlight team. You can get in touch with them on
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