The FIRE movement, which advocates financial independence and early retirement, advocates significant savings of up to 70% so that an investor can retire in their 40s. This is why the age of 45-50 is considered the new retirement age. If you plan to retire at 45, you should keep the following points in mind:
Increase savings
If you’re 30 and want to retire at 45, you’ll need to accumulate enough funds to last 30 years after that. Your annual savings should represent almost 70% of your total income once you reach the age of 30. The logic behind this is to save more than twice as much money. This way, with each passing year, you save for two years while leaving a 10% margin for inflation, contingencies and other miscellaneous uncertainties.
Medical cover
You must maintain adequate medical insurance coverage so that an unexpected medical bill does not jeopardize your investment strategy.
Keep an eye on expenses
Remember that your saving habits should match your spending habits. Therefore, your quality of life after retirement will be almost identical to your quality of life before hanging up your boots. Savings should be such that they can beat inflation and you won’t have to compromise on your retirement expenses.
Extra money for holidays
If you want to travel a lot after you retire, you can separately save money for that. You can do extra work for this.
Be disciplined
Never skimp on your savings. Be disciplined. If you deviate from the target once, you will continue to deviate again and again.
Only withdraw a fixed amount
After retirement, you only need to withdraw a fixed amount from the fund. You can do this at 3% of your fund per year. The remaining money must be invested in such a way that it continues to grow. This way, your funds will last a long time.
Therefore, before planning for early retirement, keep these things in mind.