As a millennial, you might have imagined or dreamt of a day in which you are sitting with your family, enjoying your lunch, laughing together and all your financial expenses are taking care of and you need not worry about anything.
This is a situation where there is no stress and you are at peace. This is a dream that many desire to make into reality. So, many people are planning on retiring early.Hence, people today are inspired by this dream to join the FIRE movement.
FIRE stands for Financial Independence-Retire Early. This is a movement that is growing in the west and like whatever happens in the West reaches the East also and this trend has also spread to the East I.e. India and more professionals in India are choosing to retire in the forties and leave the corporate world behind them.
Retirement is considered to be one such time to relax and be free. It is a time to give yourself a break from all the work, stress, responsibilities one has dealt with and gives a journey to help get at peace with life.
But for some, you may have heard from some elderly telling how things have been the same for them and they have been working the same amount of time they did before retirement. It may be because they are engaged in doing different things.
For others, staying busy means they are busy earning the extra income other than the pension they receive. Some people buy and manage investments. Others took to starting a business and catering to their needs requiring extra income. Some people also take part-time jobs, both for extra money and building more connections in society.
In India, early retirement always means voluntary retirement. Voluntary retirement focuses on getting your funds at a younger age. More people today are planning for early retirement so that they can enjoy life with their families outside their office cubicles.
This idea is still new in India and not many can learn this concept. But this is something that millennial like you and I are attracted to for different reasons. People who are attracted to this movement are the people who believe that the real wealth in life is time and happiness.
People who follow this movement are looking for the present. It doesn’t promise you a luxurious life, but it promises you more time with your family and yourself. So, let’s see why you should not wait until 72 retires.
You often work very hard every day and before you know it, you are in that phase of your life when it is the time of final productive years. When you become of the age of 60, you realize many college expenses have to be paid, many health bills that have to be paid and so you have to work more but retirement is going to come in no time.
It is knocking at the door and hence, you are in a dilemma when should you actually retire. Then also you think when you should take social security.
The age to retire matters the most in your life. Retirement is a really big decision. Retirement is something that arrives when your life is nearing is its end. It is one of the biggest transitions you will ever come across.
According to research, happy are those retirees who start planning at least five years before the decided age. Unfortunately many wait till the last minute. So you should start planning beforehand.
Let’s see what it looks like to retire at 50
Those who retire by 50 are the people who live in very little money and they believe in saving a lot of money. They either inherit money or think of growing their money by selling a profitable business for expanding their business.
If you are willing to retire at this age, make sure that you live on less money and if you don’t have a lot of savings, then you should go for a low-cost retirement cycle. But if you are a career-oriented person and a person who loves his job and an overachiever then there are many other reasons to consider before retiring.
If your career-oriented and an overachiever, then you might feel bored after your retirement. Too much leisure time may bore you. Whatever type you are, you should ensure that for a successful early retirement, you should take into account how much you will pay for the health care expenses. You need to make sure that you cover you have enough money to cover for the years to come.
Retiring at age 55
If you have enough savings to sustain yourself then retiring at this age may be feasible for you. Make sure that you decide a plan as to what will you do with your free time – read stories about other people who have retired at this age and see which ones do you resonate with the most. When you know how life will look like after some time and then you will have a really smooth transition into retirement.
Retiring at age 62
62 is any popular age to retire. Many people retire around this age. By this age, you should have planned enough to save money and maintain a comfortable lifestyle thereafter. Planning not only means that you have enough money to cover the expenses in the present but also you have the money to cover all the requirements that you need after retirement.
Retiring at age 65
Around 65, medical care begins and this is a time where many people find it realistic to retire, the body also doesn’t function. So, people feel like spending more time with themselves and their families. At this time, you will have to make some really big decisions like which type of Health-care policy you want to opt for and the fees for expenses that you have to pay for.
Retiring at 70
Even at 70 if you are still working then you are a person who never wants to retire. There is absolutely nothing wrong with this kind of mentality because you are a workaholic person and you don’t like spending here and there.
But make sure that this is the last age to wait until you retire because waiting after 70 will not do any good for you.
Now, what is FIRE?
Many people desire to retire early and have a stable future thereafter. But, the key to retiring early is having organized bank balance and investments which can support you and your family after retirement.
Many people decide to save 30% of their income for their retirement. But people who actually want to retire early they actually spend only 30% of the income. The remaining 70% is saved and put into various investments and savings plans.
To successfully retire early, you should live below your means. Many people spend lots of rupees on meals and luxurious lifestyles that they actually don’t need. FIRE aspirants actually choose to live a simple life and make sure that they are not suffering financially.
What do you need to remember?
The idea of retiring 20 years before the ideal retirement age of 60 is an attractive option. But you need to remember that it is a minimalist lifestyle that involves low expenditure and high savings.
The people who actually follow this lifestyle, they will buy new things when they want to replace the old things when not working. You cannot think about your social status and luxury living when you are a FIRE movement practitioner. FIRE movement allows you a much more down to earth experience and great memories.
Where to invest?
Investing is a great option if you want to accumulate money for your retirement. You have a lot of investment options today present in India. Also, need an insurance plan that provides you with security and covers not only yours but your family’s future. You can also invest in high return market-linked instruments like real estate, stock market, etc.
It is something you can physically feel and so seems more tangible to people. For a long time, real estate has been a great way to create a good amount of money. What matters the most is location as depending upon the location, one can enjoy sizable returns of the investment.
The stock market works on the concept of buying stocks. If you buy a share of stock, it means you are given ownership in that company. Regardless of what the company does or what it manufactures and sells, you can take the profits, if any, for your shares.
An index fund is nothing but a mutual fund imitating the portfolio of an index.
Index funds are very beneficial to people looking for diversifying their portfolio mostly across assets I.e the type of investment they make. Index funds invest in a broader market index like – Sensex or nifty.
Other than this, the expense ratio is low and also, they do not try to time the market but aim at tracking the market.
An index, to define is a group of securities that define the market segment. An index fund tracks benchmarks like Nifty and so the portfolio will compromise of its stocks in the same proportions.
But keep in mind that directly investing in the stock market involves high risks as it is true that the more the returns, the higher is the risk.
Also while investing, keep in mind that you choose the schemes that reduce your taxes and give you good returns. These investments provide you with the financial backup and make sure that you live a good retirement life after your 40s and then you don’t have to worry about the financial aspect of your retirement life.