{"id":11223,"date":"2017-05-05T18:08:08","date_gmt":"2017-05-05T12:38:08","guid":{"rendered":"https:\/\/blog.fundsindia.com\/blog\/?p=11223"},"modified":"2018-03-22T14:56:55","modified_gmt":"2018-03-22T09:26:55","slug":"cheat-sheet-how-to-retire-20-years","status":"publish","type":"post","link":"https:\/\/fundsindia.com\/blog\/personal-finance\/cheat-sheet-how-to-retire-20-years\/11223","title":{"rendered":"Cheat sheet: How to retire in 20 years (or less)"},"content":{"rendered":"

\"Man<\/a><\/p>\n

\u201cI\u2019m going to work till I\u2019m forty and then travel the world.\u201d<\/p>\n

Chances are you\u2019ve caught yourself or your friend(s) voicing such thoughts at least once in the past few years. The post-retirement activity could vary \u2013 you could be planning to start a caf\u00e9, become a reclusive writer, or to just chill at home with your favourite books and\/ or movies; but the core idea remains the same: stay in the rat race just long enough to build up a nest egg you can live off, and then quit.<\/p>\n

Open<\/span> a FREE Account Now! <\/span><\/a><\/div>\n

The more practical-minded among you may then proceed to dismiss these fantasies as just that \u2013 fantasies that are nice to think about but won\u2019t ever come true. However, making these dreams a reality is not that difficult. All it takes is a little planning and dedication. This mutual fund day, we\u2019re going to show you how you can retire and start doing your own thing in just 20 years.<\/p>\n

For this example, we\u2019re going to be considering a 25-year old named Karan. Karan earns about Rs. 30,000 a month now and spends Rs. 20,000 on his monthly expenses \u2013 rent, food, shopping, partying, and the rest. That means he usually has an extra Rs. 10,000 which he can put aside for his goal \u2013 to retire by 45.<\/p>\n

Assuming Karan lives till 90 \u2013 a reasonable estimate these days – he\u2019ll need to build up enough money by the time he reaches his planned retirement age to sustain him for 45 years. Of course, this corpus he\u2019ll build won\u2019t be idle post-retirement \u2013 he will have to invest it in debt funds, senior citizens\u2019 savings schemes (as and when he becomes eligible) and other such options. So, let\u2019s assume his post-retirement returns to be around 8 per cent. Finally, we need to factor in the rise in the cost of living over time (rate of inflation). Let\u2019s assume this to be 6 per cent.<\/p>\n

This means Karan needs to save up a total of Rs. 2.24 crore to generate a monthly income that\u2019ll grow in step with inflation and sustain him throughout his retirement (calculated using our retirement needs calculator<\/a>). Looks like a big target, yes? But it\u2019s quite achievable.<\/p>\n

All Karan needs to do is to start a Systematic Investment Plan (SIP) of Rs. 10,000 a month in mutual funds. He will need to increase his SIP investments by Rs. 3,000 each year (his yearly hikes should be able to cover this). Twenty years later, assuming a 12 percent return on mutual fund investments (a reasonable estimate for equity mutual funds), Karan would have saved up Rs. 2.56 crore. That\u2019s Rs. 32 lakhs more than his estimated target!<\/p>\n

Fun Fact:<\/em> If he were to step up his investments by Rs. 5,000 a year instead, he would have built Rs. 3.66 crore by the end of 20 years – nearly one and a half crore more than his target! You can calculate this yourself (or for your own goals) using our step-up SIP calculator<\/a>.<\/p>\n

Open<\/span> a FREE Account Now! <\/span><\/a><\/div>\n

Of course, what works for Karan won\u2019t work for everyone \u2013 he chose the bachelor style of life and didn\u2019t have any dependents to worry about. So, depending on your circumstances \u2013 age, planned retirement age, expenses, dependents, etc. – \u00a0your target amount, and hence, the SIP amounts (starting and step-up) will vary.<\/p>\n

But with the right planning, investment portfolio, and discipline, you should be able to reach your goal with ease. So, if you really want to retire early and do your own thing, remember \u2013 you can!<\/p>\n

Just enlist the help of a good financial advisor and you can be on your way to a comfy retirement.<\/p>\n

<\/p>\n

\"\"<\/div>\n

<\/a>
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cI\u2019m going to work till I\u2019m forty and then travel the world.\u201d Chances are you\u2019ve caught yourself or your friend(s) voicing such thoughts at least once in the past few years. The post-retirement activity could vary \u2013 you could be planning to start a caf\u00e9, become a reclusive writer, or to just chill at home […]<\/p>\n","protected":false},"author":25,"featured_media":11224,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[66,507],"tags":[289,148,516,518,471,472,184,309],"yoast_head":"\nCheat sheet: How to retire in 20 years (or less)<\/title>\n<meta name=\"description\" content=\"Looking to retire early and pursue your dreams? You can! All you need is plan well and start investing early. 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