How to Retire Early – Learn about the FIRE Movement

Dr. Deepti Dwivedi

Retirement is no longer a term that means you can stop working only at the age 60. Now, Indians are choosing to retire in their late 40s or early 50s. They’re doing it for two main reasons: millennials embracing the FIRE movement, which stands for Financial Independence, Retire Early. They do this by putting away enough money so they can live off of those funds without needing an income from work until the end of their lives – essentially living on what’s called passive income and choosing hobbies over simply maintaining jobs till death!

The FIRE concept
The FIRE (Financial Independence and Retiring Early) concept is all about the pursuit of freedom. This independence has driven millennials to pursue jobs in the private sector instead of their predecessors, who were primarily engaged in government services where retirement age was fixed and limited options for pursuing personal interests after work hours. Many Indians are now aiming for early retirement to focus on passions like traveling around the world or starting an entrepreneurial venture with ease when that time comes.

HOW TO ACHIEVE THIS…

Educate yourself
Early retirement calls for discipline, and it is imperative to be financially literate. Therefore, one must educate oneself on budgeting, investing, borrowing, taxation, and personal financial management or reach out to a financial advisor.

Early financial planning
Retiring early means you have to plan for the future way ahead of other people. You can’t put it off, even by a year or two – every little bit of time will add up and make your retirement more challenging financially.

Build a corpus
Building a corpus is essential for any financially stable life and can be achieved by setting aside as much cash as you make at your job each day after paying for rent, food, and utilities. This way, it will grow over time without requiring income from other sources like work; this means there’s plenty of room in your budget left for indulgences!

Save and minimize unnecessary expenditures.
One must be able to differentiate between “needs” and “wants.” The magical formula for financial success is to spend less than you earn. Instead of following the “Income-Expenditure = Savings” formula, use this — “Income-Savings = Expenditure” set a saving target from your income and spend what’s left after that. In this way, spending less money than earning it to save up funds faster will enable one to reach Financial Independence (FIRE) at an early age!

Make lifestyle changes
Savings is one of the pillars of personal finance. The best way to retire early is by saving every penny possible. Saving money will allow you to spend more time doing the things that matter most and living a fulfilling life without having financial stress weighing on you constantly. We can aim to cut down on expenditures by making specific lifestyle changes such as commuting via public transport, refraining from impulse buying, avoiding lifestyle-related loans, etc.

Be realistic in prioritizing your passion and income.
One must make a sensible decision when it comes to generating an income to sustain. Of course, you can choose to monetize your passion if it brings in the required amount to meet your needs, but you must also be open to returning to the mainstream job while pursuing what you love on the side.

Optimize Investments: Make your money do the work for you.
There is a lot of potential in investing for young people. Compound interest can make huge differences, and if you start early on your investment journey with savings, then the rewards will stack up over time. But, of course, you need to invest in a suitable instrument and asset class, make sure you are not investing blindly. It is vital to play a balancing act between an aggressive and conservative approach to investing.

Procure Health Insurance
Health insurance is an essential consideration for retiring early.
Health care costs are rising at a staggering rate, and your savings might deplete in no time if you do not have health coverage. Even with a company-provided cover, when you stop working, the benefits will cease to exist. There’s also the problem of rates climbing higher due to age – which means that anyone looking to buy healthcare after their late 40s or 50s may find themselves paying through the nose! If you develop a lifestyle disease, you will be obligated to comply with several terms and conditions of available health plans.

Keep loans at bay
Carrying a burden of loans in your retirement years is not advisable. Doing so will prevent you from living an easy retired life, and with the active break-in income, it may not be easy to repay loans. Using your retirement corpus money may only make things worse by harming relationships and negatively impacting living a stress-free retired life.

Emergency Fund
Build a cash reserve or an emergency fund to cover emergencies before they happen so that if something does go wrong, it doesn’t lead to bankruptcy or financial hardship for yourself and those who depend on you.

Watch these videos for some more ideas about FIRE

Early retirement sounds very appealing. However, it is necessary to consider several factors. First, to achieve your retirement goals, it is crucial to be financially literate and responsible. One can always seek assistance from a financial planner and advisor. Second, it is imperative to start chalking out your retirement plan early in life because it is vital to build yourself a corpus and find suitable means of investing for your future. Finally, make sure that you make wise, informed decisions following the general guidelines mentioned above when it comes to your financial sustainability.