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If you look around the world, there are many people who are turning their dream of early retirement into reality. I was reading about a couple who decided to retire by age 43 in 2013 after successfully saving a million dollars in four years. Early retirement is becoming a trend in recent times. Most people have started planning their finances meticulously to start enjoying their second innings as soon as possible.

Mr. Money Mustache, a famous blogger, has retired in his thirties and now he shares his experience with other individuals through his blogs about how to live economically and happily. Justin and Kaisorn McCurry have also decided to retire in their thirties by smart saving and investing skills. Another couple, Joe and Ali Olson were public school teachers, who retired in their thirties and now travel the world together. Mr. Prashant Sankaran, former CEO of IT firm Blue Shift India decided to take an early retirement to spend more time mentoring and volunteering.

If you will search the internet, you will find many such examples of individuals who decided to live a less exhausting life where they are able to pursue their hobbies while spending more time with family. But how did they manage to retire early? Simple…They knew the way!!

They knew how to become financially independent. If you are financially independent then you will not have to work for money anymore; your money will work for you. You are free to pursue your dreams without worrying about earning the cost of living.



The word retirement and financial independence are interchangeable. Early retirement is not about doing nothing for the rest your life. It simply means becoming financially independent so that you can focus on things that you like while able to maintain your lifestyle.

The examples above prove that it is not important to have a high paying job to be able to become financially independent early in your life. It is true that with high income, it becomes easier to achieve the goal as you are able to save more but that is not the complete picture. The difference between your income and expenditures is an influential factor which eventually decides the age at which you can retire.



The trick almost goes unnoticed – the fact of the matter is ‘if you want to retire early, start saving’. Having a high income can only prove beneficial in achieving your goal of financial independence if you are able to save at a high rate and maintain an economical lifestyle. The saving rate depends on the total amount you earn annually vs. total expense. All early retirees are used to live an efficient value-based life and had maintained a saving rate as high as 70% during their working years to achieve their goal.

Keeping a low expense rate will not only increase the saving rate but will also help you maintain a low cost of living in the future also. Hence, you will be building your retirement corpus at a faster rate using the art of saving while living efficiently for the rest of your life.



Intelligent investment strategies can create an additional flow of cash over and above your passive returns from savings. Higher returns from your investment can make you rich faster. However, high returns are the result of right asset allocation which should always be based on your risk appetite and total time left for retirement. For example, if your retirement is ten years away then you should consider investing a higher percentage in equities.

An ideal retirement portfolio can be a mix of equity and debt instruments like large-cap funds, mid-cap funds, value-oriented funds, PPF, debt mutual funds and so on. If you are planning to retire early then do not put all your money in inflexible retirement or investment options. Most retirement instruments allow the funds to be accessible only after a certain age; so try not to put all your money in one basket, if you think you might need the money earlier than normal retirement age. Plan ahead so that your cost of living after retirement is covered by your passive income.

Take into account the negative effect of inflation on your savings as it can reduce its purchasing power. Design your retirement portfolio such to beat inflation.



Insuring yourself and your family can help you with emergency hospital expenses. Adequate protection in the form of life and health cover is important for your early retirement plan. Buy additional insurance cover while you are working, even if you are covered under your employer’s group plan. Buying insurance will help you stay on your path to financial freedom even in case of misfortune.



When all is said and done, you will come back to your current life where you will be distracted by the leisure of life which seems comfortable now. You will notice your family and friends spending money on things like expensive cars and fancy restaurants. Don’t be disappointed if your plan of making yourself financially independent is keeping you away from the gaudy expenditures, whose only contribution, by the way, is to increase the debt. It is hard to go against the wave and say no to a lavish lifestyle which seems to be so easy and comfortable.

Your persistence will determine if you will be able to achieve your goal of early retirement or not. In the long run, when the same friends and family will still be struggling to pay off their mortgage and other debts, you will be enjoying your retirement on your terms, debt free. Planning was the first step towards early retirement, executing that plan is what going to give you returns. Set milestones, set reminders or save a photo of your favourite travel destination as a screen saver on your computer.

Try these tricks to keep yourself motivated and focused on your goals. Every step counts when it can take you closer to your dream of financial freedom.

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