Here’s how you can retire at 40
Are you sick of the prevailing job instabilities? Is the hectic work schedule making you think of retiring early?
You may have always dreamt of leading your life just the way you want—like spending most of your time with your family or just fishing at the neighbouring riverside. Whatever be the case, calling it quits by the age of say, 40 won’t be a bad idea.
Many people around the world have already shown the way by doing it. Dianne Nahirny, author of ‘Stop Working ... Start Living,’ for instance, retired at 36 with a net worth of $225,000 and a mortgage-free house in a well-off Hamilton neighbourhood—despite having an average annual income of $20,000 while working. Larry Ferstenou, author of ‘You Can Retire Young,’ retired when he was 42 years old more than a decade ago.
On the Indian scene, too, we have several path breaking examples of people like Sabeer Bhatia, who walked away with a $400 million deal with Bill Gates, Muktesh Pant, ex-MD of Reebok who quit early to pursue the study of yoga and meditation and Rattan Chugh, who took early retirement at Fidelity Investments to pursue his dream of setting up an enterprise of his own.
These high-profile cases may make us believe that early retirement—that is also gaining financial independence in a way—is not for common people. That, however, is not the case. In fact, according to experts, many people have retired in their 40s or 50s without being rich, but neither were they poor.
“The net worth you are going to need (post-retirement) will depend on the lifestyle you want to live. And the philosophy is quite simple: If you can live on less than most people, you can probably retire earlier than most people,” advises Ferstenou in his book.
In fact, the younger generation today has never had it so good in India. They are responding to newer challenges well and are more ambitious and professionally better equipped than ever before. However, the trade-off to this abundant opportunity and increased competition is that one is looking at a burn out in their face, quite early on in life.
“With stretched work hours and strenuous routines, saturation levels are setting in earlier for the youth today. In such a scenario, early retirement has become more a need than desire,” explains Rajiv Deep Bajaj, MD, Bajaj Capital, adding: “The world today is dynamic as never before and there is certainly nothing like ‘ceteris paribus’ holding true anywhere.”
True, planning to retire early is not an unusual phenomenon anymore in India or abroad. “As we take our clients through our financial planning processes, we find a lot of them intending to retire by the time they are in their early 40s. In all cases, an individual’s means may not provide for realising a vision like this. So, we work out alternate scenarios for them to give them a reality check and make the right decision in time,” says Bajaj. Globally also, this trend came up in full force abroad much before India and now has even become a part of lifestyle there.