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Financially Independent, Retired Early is a movement that started in the West. People started aggressively saving and investing their money to generate various income plans, allowing them to retire in their 40s and do the things they love. This movement has also recently gained momentum in India. And guaranteed insurance plans and investment plans are the quickest ways to achieve retirement early.
Here are 5 tips on how to retire early that can help you with your retirement goals.
Starting early: This tip is for all the young adults out there who want more from their lives. You can do so by retiring early. You need to start working and investing for your retirement while you are in your 20s, allowing you to amass a significant corpus for retirement by the time you are in your late 30s. The earlier you start, the earlier you can reach your retirement corpus.
However, you should remember a few things before starting on this journey. Parking money in your savings account is not going to be enough. You need to diversify and invest in various other assets. Be it real estate, Gold, or equity assets. You must learn how to make money work for you.
Actively manage your portfolios: Managing your portfolio is a bit difficult if you are a full time working professional. When you put money into the market through intermediaries, you will have to pay them an annual management fee. The fees are usually 1-2% of your investment amount. They might not seem like a lot, but you will lose around 15% of your equity profits, over years, to these actively managed portfolios over the years. And it will put a dent in your regular income plan for retirement.
One way to bypass this is to manage your portfolio, which might seem difficult at first, but you will become better at it with time. And you will not have to pay these heft management fees. You will also be adept enough to adjust the investment allocation based on your requirement to gain the upper hand in the market. Always remember to hedge your investment to protect them from unpredictable market conditions.
Automating your finances: The journey to retirement is a long one and might be tiresome for some people. You will have to track your expenses, work a full-time job, find a hobby to pursue after retirement and juggle many other responsibilities that come with being an adult. You will also have to look after your actively managed portfolio and the premium for your life insurance and savings plan.
To escape this loop, you can automate most of your payments. You set up systematic payment plans that will automatically invest money into your mutual funds. You can also set up mutual funds for your actively managed portfolio and automate the payment of premiums for your life insurance and savings plans. They will directly take the money from your bank account whenever it is due. You can set the same for your credit card bills and other utility bills as well. Such a system will allow you more time to focus on your goal of retiring early.
Financial planning: Without a proper plan, it is impossible to achieve the early retirement dream. You will have to be organised with your finances. You will have to keep a close watch on your expenses, which will also help you extrapolate your expenses post-retirement without giving up on your current lifestyle. After factoring in inflation, you will arrive at a monthly expense figure for your post-retirement life. Such an exhaustive process will then allow you to make a target for your corpus.
You will have to keep track of your earnings with such precision, as well. You will also have to factor in the withdrawal rate from your retirement corpus that will utilise the corpus money over a few decades. But do remember to provide for unforeseen circumstances; otherwise, you have set up a very precarious plan that is only one misfortune away from blowing over.
Getting life cover: While getting all the above steps in order, you also have to ensure your life and your family’s financial future. The future is unpredictable and full of uncertainties. There is a chance that you might not reach your targeted corpus due to some mishap. And if that happens, insurance policies can help you reach that last mile and help you achieve your retirement dreams. This also ensures that you hedge your corpus and don’t have to worry about losing it all due to a bad economy.
A life insurance and savings plan are also useful if something unfortunate happens to you before reaching your targeted corpus. In such cases, life insurance and term insurance plans will ensure your family’s future is secure. The payout from the policy can help with the expenses for your family such as your children’s education and their marriages.
Tata AIA Life Insurance Guaranteed Monthly Income Plan
The Tata AIA Life Insurance Guaranteed Monthly Income Plan (UIN: 110N147V02) ensures a comfortable post-retirement life. This plan offers monthly payment up to 288 months after your retirement to ensure all your bills are paid. It also provides a rider option to expand your coverage. Apart from this monthly savings plan, you can also check out term insurance, guaranteed returns insurance, annuity plans and Unit Linked Insurance Plans from Tata AIA Life Insurance.
You might have to make some sacrifices in your current lifestyle while preparing your retirement corpus. But that does not mean you should not enjoy the present. But a few sacrifices in the present will be entirely worth it post-retirement. The above early retirement planning tips will make the process easier for you. Remember to take up a hobby to pass your time after you have retired. Follow the above mentioned steps with discipline, and you will secure a financially comfortable life.
Insurance cover is available under the product.
The products are underwritten by Tata AIA Life Insurance Company Ltd.
The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
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This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry
Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch
IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
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