Last Updated on March 3, 2019 at 10:23 pm
Download a free early retirement calculator for India with a checklist to retire early in India. You can also down a free e-book to plan early retirement. When I earlier asked “Is it possible to retire early in India?“, many readers assumed that I meant early retirement is not possible in India. All I wanted to convey was that excessive portfolio volatility is not the answer to combat the high inflation in India.
I followed that post with a friendlier illustration on “How much do I need to retire early in India?“. The message was still the same: when it comes to retirement, safety first! However, this was perceived more positively.
Now I would like to discuss a simple checklist which might help readers assess their preparedness for early retirement. The calculator is based on the above illustration.
What is early retirement?
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! 🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
It simply refers to cessation of regular employment. The person could still earn from consultancy (part-time or full-time) or by other means, but that income is considered temporary and is not included in the retirement plan. That is, we are financially in a position to work if and when we please.
Retirement planning is counterintuitive! Very few realise that earlier we retire, lower our retirement corpus! So planning for early retirement with a ‘low’ corpus could well be easier than planning for normal retirement with a ‘low’ corpus (more on this later).
Before we look at the checklist, some dont’s:
- Get rid of the notion of a “safe withdrawal rate”. If you must use the idea of a withdrawal rate, replace ‘safe’ by ‘initial’. Use this calculator to see why I say so: What Should Be Your Retirement Withdrawal Rate?
- Recognise the importance of “sequence of returns”. A few bad years in the stock market can destroy a retirement portfolio. I have the had the privilege of studying some robust early retirement portfolios and the equity component has never exceeded 50%.
- Even after you retire (early), you need to review the portfolio each year and determine if you can afford to stay retired.
If you wish to retire early, here are some tools that might help
Understand the corpus accumulation process:
Step 1: The low-stress retirement calculator (hopefully!)
Step 2: The even lower stress retirement calculator!
Step 3: Low-stress retirement calculator with flexible asset allocation (advanced version of step 1. If you want me to add this feature to step 2, leave a comment)
Step 4: Stress Test Your Retirement Plan
Understand the corpus management process:
Step 1: Generating an inflation-protected income with a lump sum
Step 2: Illustration: Generating inflation-protected post-retirement income
Step 3: Inflation-protected Income Simulator
Step 4: Try out the game: Retirement ‘Bucket Strategy’ Simulator
A checklist for early retirement in India
(perhaps anywhere!)
- Do I have an emergency fund which is at least equal to 12 months expenses, preferably 24 months? A part of it should be liquid and a part of it should grow in perhaps a ultra-short term debt fund for future use. The health of this fund should be reviewed each year.
- Do I have a health insurance cover for all my family members, be they dependents or not. Preferably an individual health cover for each.
- Do I need to continue my term life insurance cover after I retire? I think early retirees should continue and let the policy run its course, especially if it is an online policy.
- Do I have enough money (call this C1) to allocate to fixed income assets so that I can receive an inflation-protected income for at least the first 15 years of retirement (years 1-15: called the first segment in the calculator).
- Do I have enough money (call this C2) to invest in a reasonably aggressive portfolio (not 100% equity) so as to generate a corpus with which I can receive inflation-protected income for the next 15 years of retirement (years 16-30: called the second segment in the calculator)
- Do I have enough money (call this C3) to invest in a reasonably aggressive portfolio so as to generate a corpus with which I can receive inflation-protected income for the last 15 years of retirement (years 31-45: called the third segment in the calculator)
- Total corpus required for early retirement = C1 + C2+ C3. Use the calculator (link below) to play around with this. I have used 10% as the portfolio return for the growth of C2 and C3. This is not offered an input, but you can change it yourself easily.
- This is just an illustration. An alternative but similar illustration can be found here: “How much do I need to retire early in India?“
- Have I used reasonable inputs for expenses, inflation and return in the calculator?
- Do I know what I am going to do after quitting my regular job?
- Do I know how I am going to use any part time income that I might generate?
- If I am going to travel or use funds for expensive hobbies, do I have a budget and a separate corpus or source for the same?
- Does my early retirement plan depend on my frugality? Do I understand that frugality is a luxury?! We may want to be frugal, but life should let us.
- Do I understand that life is uncertain, will not pan out like it does on an Excel sheet and that the best plans can go awry in an instant?
What do you think? Have I missed out anything?
Early retirement calculator
Here is a screenshot.
Download the early retirement calculator
Updated: Thanks to feedback from Atul.
Early Retirement in India -How to Retire Early Safely: Free E-book
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)