Business Spotlight

Early Retirement: Why It Remains A Dream For Many & Ways To Address It

Pravin Budhauliya,Founder & Director,Degree 212 Investment Services & IMF Pvt Limited


Pravin Budhauliya

Retiring early is a dream for many. Afterearly retirement, one can bid goodbye to work-related stress and ailments by finding time to exercise, meditate and eat healthy. This is bound to improve one’s health and consequently quality of life. With no pressure of meeting deadlines, one has the flexibility to decide the pace at which one wishes to lead a well-rounded and balanced life. One can even travel at ease or engage in adventurous activities at leisure without having to worry about age-related physical constraints. 

Another important aspect which an early retirement helps with is in re-establishing a healthy social life. One gets the time to connect with school, college and professional friends. One has the flexibility to meet new and interesting people or work on projects on topics one is passionate about. 


Moreover, an early retirement can be the gateway to explore your talent, passion and abilities. You could even earn generate an income stream by working on your passion projects. This will not only boost your self-esteem and but also overall well-being. Despite these and many more benefits associated with early retirement, one of the predominant reasons for delaying an early retirement is the lack of having sufficient funds to address post-retirement needs. 

Things to be Mindful Of 

When planning for retirement, there are various parameters one has to be mindful about. To begin with, life expectancy has improved over the years thanks to medical advancements. So, one needs to plan for at least a 30-year retirement period. 


While at it, it is best to pencil in medical inflation at around 15% if not more. For those with kids, education inflation could account for around 5%. Such high levels of inflation are bound to play impact one’s ability to save more for retirement, as one may need to divert funds to meet child’s education expenses or healthcare needs. Another challenge one has to contend with, is the falling interest rates of small savings schemes (which are preferred by senior citizens). This means an individual will need a larger retirement corpus to take care of one’s retirement needs. 

Where We Stand 

Scripbox’s Financial Freedom survey shows that nearly 80% of the respondents are unsure of retirement planning, while 62% began saving for retirement only in their late 30s. This translates into lesser number of saving years which ultimately results in a smaller corpus. Another study by Max Life Insurance found that four out of five people fear they will run out of savings during retirement. But the reality is that individuals even after knowing that one will retire at 58 or 60 tend to procrastinate planning for sunset years assuming there will be an extension available. 

If one starts saving for retirement early on, time is on his/her side for investments to grow and benefit from the power of compounding. Compounding is the interest you earn on your principal sum plus previously accumulated interest or earnings. What is important in retirement planning is starting early, sticking to a solid retirement plan and executing an investment strategy which will aid in reaching your retirement goal within a comfortable time-line. 


Investing for an Early Retirement 

The asset class with the highest return potential over long term is equities. But it is also the asset class with the highest risk. Generally, the earlier you start investing in equities the better it is, as the risk taking ability is higher and investments also tend to benefit from the time spent being invested in the market. This will help in achieving the target corpus amount faster. As one gets closer to retirement, it is advisable to shift from equity to a more conservative strategy such as hybrid or debt. 

For one’s retirement needs, there are a variety of mutual fund offerings available which one can rely on to build the corpus required. A smart mix of asset classes or dynamically managed asset allocation schemes can be considered apart from investing in equity oriented schemes. If you are unsure how to proceed, then it is best to consult a financial advisor who can guide you through the process.  


To conclude, retirement is a non-negotiable reality. It is best to assign due weightage to retirement planning as early as possible to live a financially secured life.