Early retirement is a goal of a few individuals and a dream of many. Early retirement can mean living wherever you want and do whatever you want for a long time. Realising the importance of retirement planning, a lot of individuals plan to retire early. Sure, retirement planning is essential, but if you are planning to retire at the age of 50, you might want to think again. Following are some of the reasons why you should consider it again:
Increased life expectancy
In the 1960s, the average life expectancy in India was close to 41.4 years. At present this number is close to 69.73 years, and this figure will keep snowballing. With improvements in the world for healthcare, the younger folks of today are likely to live a longer and healthier life. An increased life expectancy is accompanied by a long period where your savings need to take care of your needs.
Bye-bye bucket list
The more you put your savings away, the more you can pamper yourself in your golden era – retirement. Sure, Manali is nice, but what about going on safari in Ranthambore, taking a Caribbean cruise, or sailing the Arabian sea? If you stay in the workforce, you can grow your EPF (employee provident fund) and PPF (public provident fund) savings significantly—and then live out your dreams, be it small or big.
Added expenses throughout the life cycle
As the overall lifestyle of individuals has improved, more and more big-ticket expense elements are finding their way into our lifestyle. For example, the college expense for your child today is far higher than a few years back and is progressing rapidly. People today wish for huge nuclear homes. One cannot also forget the ever-increasing travelling costs. Given all these additional expenses, the build-up of retirement corpus is getting delayed.
Post-retirement expenses are also growing
One of the primary goals of early retirement is to do those things that you may have missed out on during your working life. Things like international travel are beginning to become the norm. What’s more, health care costs are constantly rising. Hence, it wouldn’t be wrong to assume that post-retirement costs are increasing.
Additionally, lifestyle is continuously changing and improving. As a retiree, you’ll have to keep pace with the added expenses as a part of your lifestyle.
Poor portfolio planning
Most people do not have any investment portfolios that are expected to provide inflation-beating returns. During your earning/saving phase of life, if you do not invest wisely, the chances of retiring at the age of 50 significantly decreases.
Think twice before retiring early. If your portfolio shows that retiring is scarcely feasible, you should consider your decision, especially if you have positive assumptions. It is safer to stress test your plan. Have a look at what would happen under different scenarios, including some pessimistic events like high inflation or a serious bear market. Happy investing!
Photo: jagoinvestor.com
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