How to retire early from Job in India 2019

Since very early in my job, I started searching for answers to this question; how to retire early from Job?

Generally people think about early retirement from job in their fifties.

But I was exposed to the concept of ‘financial independence’ in my early thirties, hence this hurry.

Today the situation is such that, I live day-in-day-out to understand how to retire early from job.

In this blog post I will share my realizations and understandings about how to retire early from job in India.

One thing is sure, taking early retirement is not a piece of cake.

In one wants to buy the liberty of early retirement, surely it is not available next door.

Early retirement is a scarce commodity and majority people can only dream about this liberty.

Early retirement will need all financial skills to make this dream a reality.

In this article I will list down some steps we can take in our person life to ensure early retirement from job.

#1) Do not keep early retirement as an alternative option to job

Earning money from job is easier.

Executing responsibilities in a job can be difficult, but the ease with which the paycheck drips-in each month is too simple.

There is very less correlation between efforts in job vs paycheck earned.

In fact people have to wait the whole year to get feedback.

As a result, majority takes corrective actions once a year only.

In order to realize the dream of ‘early retirement’, such delayed actions are not welcome.

But if it is so, why people do not take proactive, quick actions?

The reason is, lack of determination.

People dream of early retirement, but their actions are not in conformity of the final goal (early retirement).

To ensure the achievement of this goal, one must do everything ‘today’ to ensure its realization.

The realisation will happen only if one must not consider early retirement as an alternative.

Early retirement is something which must be a non-negotiable target.

#2) Quantify early retirement in local currency

One must start to look deep into ones standard of living. Start to separate out all expenses as compulsory, comfort & luxury expenses.

This kind of expense classification allows people to understand if they are overspending or not.

People spending too much on comforts or luxuries tend to overspend.

A person who wants to retire early, must first build income which takes care of at least compulsory expenses.

To understand this, lets take a random, one-off example. Suppose a person spends Rs. 2.0 lakhs per month to manage his daily expenses.

Our of these 2.0 lakhs, 35% of these expenses are ‘compulsory’ expense.

It means, if a person wants to retire, he must first develop ways to generate an income of Rs.70,000 per month.

In order to generate, Rs.70,000 per month, sufficient saving must be built.

As per rough estimates, savings of worth Rs.1.4 crore can generate income of Rs.70,000 per month.

A person who want to retire in next 10 years of time, will need an equivalent savings of Rs.1.4 crore 10 years from now.

Considering 6% as average inflation in next 10 years, Rs.1.4 crore of today will be equivalent to Rs.2.5 crore 10 years from now.

This is the way one must quantify early retirement.

In our example, the person must build Rs2.5 crore savings in next 10 years.

#3) To know how to retire early, create a road map

In #2 above, it is clear that that target (Rs.2.5 crore) must be achieved in next 10 years.

But the bigger issue is to specify, how to build a mammoth savings of Rs.2.5 crore in 10 years.

By simple maths, it seems that each year one must build a savings of Rs.25 lakhs each year.

Twenty five lakh every 10 years means Rs.2.5 crore at the end.

But Rs.25 lakhs each year means, Rs2.0 lakhs per month.

For majority people in India, savings of Rs.2.0 lakhs each month is like impossible.

So what is the alternative? The trick lies in the power of compounding.

A person who spends Rs.2.0 lakhs per month, can save 69,000 for onward investing.

If this person invests Rs.69,000 per month as SIP in diversified equity mutual fund @16.5% p.a, portfolio worth Rs.2.5 crore can be built in 10 years.

The amount of Rs.69,000 per month will further reduce, if one has some existing savings.

Suppose in our above example, the person has Rs.5.0 lakhs as existing savings.

This savings is then invested in diversified equity mutual fund, which generates long term returns of 16.5% per annum.

This will reduce the SIP requirement from Rs.69,000 per month to Rs.62,600 per month.

Such specific calculation actually helps in creation of realistic road map.

This can help achievement of financial independence which eventually helps in early retirement.

#4) Make sure that the early retirement plan does not fail

For common men, there are two major threats that can jeopardize the goal of early retirement.

One is a common bad habit of needless spending.

The other is limited ability of people to generate alternative source of income.

These are two very daunting bottlenecks. They have potential to limit the realizing of the goal of early retirement.

But do not worry about these limitations.

Trick is not to focus on limitations because attaining financial independence in itself is a huge target to achieve.

If one also starts to concentrate on other limitations, achievement of early retirement will become nearly impossible.

Hence, being positive about the concept of early retirement, enables one to think innovative and generate alternative source of income.

[Trick: Learning the skill of delaying gratifications]

How to retire early from Job – Final words

We all want to retire early from our job to lead a free life.

But in order make this dream a reality we shall get passionate about its realization.

The next step is to set forth and write down few steps about how you are planning to reach this ultimate goal.

Always remember that, plan for early retirement is linked with ones ability to lead a financially independent life.

If one can become financially independent, dream of early retirement will automatically become a reality.

4 Comments

  1. Hi Mani,
    Landed on your blog via web-search and found it informative and relevant to the topic.
    I’m also on a journey to F.I.R.E. In addition to what you have already mentioned, a regular review and adjustment of the targets is also important since they are set based on assumptions/predictions(ex. RoI, tax liabilities, inflation rate etc.)

  2. Rational thought process, yet a difficult goal to achieve for Indians. How many can really invest so much in SIP every month? It would be interesting to watch how many succeed. Well written. Adding your post to my list in list.ly and eventually to my blog.

    • You are right Sonia. This is why asset building process must start very early in life. Thanks for your comments.

  3. Hi Mani,

    Great Article on Early retirement in India.

    My husband and I started our Early Retirement Journey in India about 5 years back. The first difficulty we faced was no one in India was blogging about it, all the blogs we were following were US centric. We as a couple spent a lot of time translating that information in Indian Context. Thankfully my husband had worked in USA for a decade so he had a prospective on what we can borrow from US concept and what we cannot.

    The whole process of brainstorming gave birth to our blog “savinghabit”, where we share our personal journey and technical information that we gathered in last 5 years pertaining to Early Retirement in India.

    Your article on Early Retirement hits home. For us also achieving Financial Independence is among top priority. It takes motivation and determination but in our experience it is worth it. Backed on our Financial Saving we have taken a lot of bold steps in last 4 years- started a business, took break from work etc… It was only possible because we had saving to fall back on… Now we can not wait to be fully financial Independent!!!

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