How to Plan Finance for an Early Retirement?


In India, early retirement planning is not fashionable at present. Many individuals think retirement means being old. They think it is tough to plan finance and retirement with a stable income.

But nowadays, youth are planning their retirement in their early 30s. The imbalance between lifestyle and workload is making people retire in their 50s.

You can also plan finance in the right direction. It helps with a safe and early retirement. You can live a stress-free life with your family without worrying about money.

Passive income generation is most important in retirement planning. Mutual funds and property can help you to plan finance.

Personal Financial Planning in Five Smart Steps for Retirement

If early retirement is your goal, consider these small yet simple steps. These steps will help you save and generate money easily.

  1. Start planning early.

You must start planning today if you’re considering retirement in your 40s. Plan finance at the right time to stay in the loop with opportunities. Don’t waste time like others by planning late and taking the wrong approach.

You can explore the options available and choose wisely. Use expert financial advice and research, keeping your details in mind. Inflation is an important subject in calculating your corpus. Inflation reduces the money’s value with time. Include your family details and personal finance activities in the corpus calculation.

  1. Estimate your expenses and savings.

Your savings amount in retirement planning must follow the 25-times rule. The rule says you must have 25 times more money than your annual spending when you stop working.

For example, if you spend Rs. 1 lakh a year, you must have Rs. 25 lakh as your retirement money. This amount must be in your account when you stop working. Consider inflation and your risk tolerance when saving.

It will help if you manage your expenses smartly. Follow the retirement corpus to make decisions. It will make you independent. You must follow this path to never run out of money.

  1. Adjust your current income.

You can manage your current income easily. Make a smart budget plan for food, bills, transportation, and extra spending. You can eat at home, use public transport, and apply for subsidies to save money.

Early retirement plans need 50% savings in income. It would help if you had multiple incomes to save more money. Maintain your credit score for low-interest loans if needed. It will help save taxes.

  1. Choose a long-term growth investment.

Simply put, early retirement planning allows for less time to save and more time to spend wisely. It would help if you spent in a way that made your savings valuable.

Consider investing in long-term investments as passive income in personal financial planning. Compare and invest for the best return with a great portfolio. Watch your approach to money and save as much as you can.

  1. Health Insurance

Personal financial planning with health insurance is a great step toward early retirement. When you grow old, your body will need regular check-ups. The cost of routine checkups can be taxing at times.

The premium amount for health insurance rises in the 40s and 50s. It would help if you bought health insurance at a young age. When you buy at a young age, it extends your cover. Compare and choose the best health insurance for the long term. You can assess the amount and save smartly for health. Healthy eating habits will also save you from extra expenses.

You may include your point of view in planning. You should make an official list with expenses and income. It will give you a clear picture of retirement planning.

Why Should You Plan Retirement at a Young Age?

Early retirement may seem odd to some individuals. But it’s a great chance to learn about your future. The idea of retiring in your early 50s gives you financial freedom. Let’s check out why we should plan early retirement:

  • The uncertain future may bring anything. As a result, saving money would be beneficial.
  • Early retirement gives financial independence to individuals.
  • Life expectancy has improved in India. So, after retirement, people survive for 10–20 more years. Retirement planning helps the individual survive.
  • Expensive health care is becoming a burden for individuals. You can save on expenses and invest in your health. Health insurance and a healthy lifestyle are the best ways to stay fit.
  • Retirement planning gives you self-confidence.

Why Should You Choose Mutual Funds?

Mutual funds are long-term investments in reputed company shares. Anyone can buy shares with investors for long-term returns and dividends over profit. You can buy the shares legally for retirement planning. However, make sure you get some financial advice from someone who knows about investing before you jump in.

You may consider the following reasons for choosing mutual funds in your retirement planning:

  1. Tax Efficiency

Long-term investments do not generate much tax. You can save on tax expenses by investing in high-return mutual funds.

  1. Effective for inflation

Inflation is rising and increasing people’s living expenses. So, you must invest in funds that also increase with time. Growing mutual funds are best for inflationary situations.

  1. Easy on the pocket

Mutual funds do not need big investments. A small EMI amount is more than enough. The monthly amount is between Rs 500 and Rs 1000. You should choose a fund with limited entry, exit, and management fees.

  1. Easy Liquidity

It would help if you chose without lock-on period mutual funds. It helps you withdraw money whenever you want. You may invest in 3-5 year lock-in period mutual funds for liquidity.


Early retirement is easy with smart planning and investments. It would help if you had more income than expenses. Check the steps given above for an idea.

When you start early retirement personal financial planning, you get the chance to change. It helps you cherish your present and future. You may seek guidance from experts. Explore the best mutual funds for long-term investment plans. Compare and select the best with caution.

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