Retirement Plan: Want to retire at 50 with a salary of ₹1.5 lakh? Here’s what you need to do.

Retirement Plan: Do you also wish to retire at the age of 50 with a salary of ₹1.5 lakh? Simply having that salary isn’t enough; there are other steps you need to take. Let us explain.

Retirement Plan: Typically, the retirement age is 60. In government jobs, people retire at 62. However, nowadays, people want to retire at 50 instead of 60 or 62—and this is indeed possible. While earning a monthly salary of ₹1.5 lakh before retirement makes this feasible, is a high salary the only requirement for a comfortable retired life? The big question is how to achieve this; let’s look at how it can be done.

Managing expenses is crucial

The reality is that how much you spend and invest matters more than just how much you earn. If you spend ₹1.2 lakh out of your ₹1.5 lakh salary on EMIs, rent, and other expenses every month, you would need a retirement fund of approximately ₹5 crore to retire at 50. Conversely, if your monthly expenses are around ₹50,000 and you regularly invest the remaining amount, a fund of about ₹2 crore would suffice.

How much to spend and how much to save?

Inflation in India is constantly rising. Expenses related to health and lifestyle, in particular, rise faster than the general inflation rate. Therefore, those planning an early retirement should withdraw and spend only 3% to 3.5% of their accumulated corpus annually, preserving the rest so the money lasts longer and their standard of living remains consistent after retirement.

The age of peak spending

Expenses are usually highest between the ages of 40 and 50. Responsibilities such as children’s education, their weddings, and caring for aging parents often arise during this phase. If you are forced to withdraw funds from your investments to meet these needs, your goal of early retirement could be delayed.

Set Aside Funds for Healthcare

Healthcare expenses can become a significant burden after retirement. Once you leave your job, employer-provided health insurance coverage usually ceases. Therefore, it is essential to have adequate health insurance for the family, coverage for critical illnesses, and a separate fund for medical emergencies. Additionally, it is advisable to keep an amount equivalent to at least 1–3 years’ worth of expenses in safe investments.

Do Not Rely Solely on Accumulated Savings

Furthermore, relying exclusively on accumulated savings after retirement may not be prudent. It is beneficial to consider alternative income sources—such as rental income, dividends, mutual funds, fixed-income investments, freelancing, consulting, or a small business—to ensure financial stability during this period.