Over the last decade or so, early retirement has become a trend in India. Most working professionals in India dream of retiring early, pursuing their dream business and leading a happy, healthy and stress-free post retirement life, where they don’t have to worry about the upkeep of their lifestyle. But how many of them are actually able to realize this dream? The answer is simple – just a very of the majority! Why? This is because most working professionals do not really plan their retirements well. Reluctantly, they are left in a lurch upon early retirement. And in many cases aren’t really able to cope up with their post retirement lifestyle expenses, leave aside pursuing their dreams of opening their own businesses.
So does that mean it is not possible to retire early, pursue your dreams of launching a startup of your own and still give a happy, healthy and content post retirement life to self and family? The answer is – It’s Possible! How? By carefully figuring out how much would you need to lead a healthy and hearty life upon your early retirement using a pension calculator and checklist! Wondering where would you find the checklist and how would you use the pension calculator? Don’t worry; we have got you covered. Check out this article to get hold of the early retirement checklist and to know the calculation of retirement corpus using pension calculator.
So let’s reveal the checklist now!
Early Retirement – Checklist
- Figure out if you have emergency funds. Remember, it must be equal to your 12 months expenses. And we aren’t talking about hard currency cash in hand. Ensure that half of this amount is available in liquid state and half of it is invested with an aim to get short term growth. Don’t forget to keep a keen eye on the growth of your fund and keep renewing it each year.
- Early retirement or no retirement – health of self and loves ones comes first. So make sure that you have adequate health insurance cover for your entire family.
- Make sure you have invested in a great term insurance product. This would help you ensure a comprehensive financial protection for your loved ones at all times.
- Ensure that you have sufficient funds to invest in fixed income assets in order to get hold of inflation-free corpus for a period of at least 15 years from the time of your early retirement.
- Make sure of investing a substantial amount in a fairly aggressive investment instrument like mutual fund to generate inflation-protected corpus for the first 15 years of your early retirement.
- Do well to take into account your current lifestyle and other compulsory expenses, the current inflation rate and the rate of return when using pension calculator.
- Be clear with what you plan do after your early retirement – are you going to become a consultant or are you going to launch a startup of your own.
- Figure out if you will be able to generate some part time income and how would you be spending that income.
- Think if you may require travelling or pursuing your hobbies upon early retirement. Carefully calculate the budget and have you saved enough for the same.
- Carefully mull over if you want to lead a luxurious lifestyle upon early retirement because that might eat up a large part of your retirement savings.
Now that you have your checklist ready, it’s time to move on and pan out the details in a pension calculator to calculate your early retirement calculator.
Early Retirement Calculation Using Pension Calculator
It is fairly easy to calculate the cost of your early retirement corpus in India. Internet simply swarms a fairly large number of free early retirement checklists and pension calculators. These resources and pension calculators make it utterly easy for one to calculate the cost of early retirement in India. But sadly, a large number of people remain clueless about the same. But to help you out with the calculation of your early retirement, you will need to feed in 10 vital piece of information. These information are as follows:
- Your Date of Birth
- Target retirement age
- Life expectancy
- Current Annual Income
- Current Annual Savings
- Current Annual Expenses
- Return rate on investment
- Expected Pension amount
- Inflation rate
- Expected tax liability on retirement corpus
That’s it! Once you out in all this required information in one of the pension plan calculators available freely on the web, you will be able to calculate the cost of your early retirement. Isn’t it simple? But before you jump into action, remember always ensure putting a reasonable figure in the expected pension amount, take the highest possible tax rate on pension and do not forget to add anything when calculating your annual household expenses. This will help you arrive at a better figure when calculating your early retirement using pension calculator.