First step when preparing for early retirement or retiring at 45, ask yourself how will spend your life in retirement
A lot of people mistakenly think that they need early retirement when they actually have a problem with their job or profession
What would you spend your time after early retirement?
Depending on the answer to the question, determine you financial requirements for retirement
The next question is how much money you will need to lead a regular life after an early retirement
You will need larger saving for retired life after an early retirement when compared to a regular retirement
Now, in a far shorter work life you need to accumulate enough savings for a longer retired life
Retirement savings will need earn enough in retirement and covers regular and periodic costs
It should be able to cover even unanticipated costs
With the retirement savings target fixed, determine how much need to spend and invest
You will need to invest more since you will need to save more in a shorter work life
Be prepared for compromises like cutting down on some expenses
Look for expenses that can be staggered
Invest your money in high growth investments that grow faster than inflation
Remember, your retirement savings will need to generate enough money in retirement to cover all your expenses
You can't rely on fixed deposits for growing your money
You money has to grow well despite the impact of inflation and tax
Opt for equity mutual funds to grow your money
Consider consistency of performance over 1, 3 and 5 years for equity mutual funds
Compare performance with the benchmarks of the funds besides comparing performance with peer funds
You can invest through systematic investment plan or SIP
If investing in an SIP before, increase the SIP amount
Get a fix on your retirement housing. Where will you stay after early retirement?
Retirement housing is important for anybody but it is critical for those planning an early retirement
This is because it is a huge investment and you need take loans
You can't have an early retirement if you have an outstanding home loan
You need to retire any home loan before you retire early
You need to make provisions for healthcare costs
During age 40-45, ailments typically start surfacing
Remember, as you age, medical costs typically increase
You need to have health insurance and coverage for critical illness through critical illness cover
Ensure that your family is covered by health insurance
Retirement savings shouldn't get spent in medical emergencies in retirement
Have a Plan B that will cover you just in case things don't go as planned