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How to

Retire 7 Years Early

Accumulate 10 Crores
on Retirement

Is it Really Possible to Retire Early?

The thought of retirement often conjures up visions of a worry-free couple

lounging by the beachside watching the sun go down. And the popular belief is
that for that precious moment to arrive in ones life, one has to slog it out for
years and wait till the official retirement age dawns (60 years in India). Is
retiring really that complicated?
Almost every individual today aspires to retire early, so that he could pursue
his other passions - be it music learning, travel or a voluntary work.
Sometimes, retiring early is just to get time to spend with family sans the stress
of daily deadlines and travel.
If youre reading this, youre probably one such person. And the first question
in your mind is that is it even possible?
The answer is YES and well show you how.
To start with, the essence of retiring early is about achieving the financial
strength to be able to do so. Since yur savings must pay for expenses during

retirement, the question to ask yourself is Are you saving enough financially
to be able to retire early?

The 2 Most Important Aspects to Worry

About For an Early Retirement
#1: Becoming a crorepati might not be enough for a comfortable
early retirement
While having a crore of rupees sounds
great on paper, is that really enough
when you retire?
Lets do some simple math.
If you are currently 30 years old with an
annual salary of Rs 6 lakh, your annual income at retirement (60) should be
roughly Rs 60.37 lakh to match your current earning levels (taking into account
inflation @ 8% p.a.). That makes your 1 crore dream not even equivalent to
two years of your then salary.
To get a more accurate idea of how much money you earn today will become X years later
on, use this tool (Ignore US Dollars).

So, how much money do I actually need to retire early?

With inflation on the rise, you need much more than you actually think you do.
For example: a 30 year old, targeting to retire at the age of 60 and spending
around Rs 50K per month will require Rs 7.19 crore on retirement (assuming

inflation @ 8%p.a., life expectancy of 85 years, and no income post

To get a more accurate retirement amount required for your current scenario, use this tool.

#2: The earlier you start investing for retirement, the earlier you
can retire
Sounds pretty simple, right? But did you realize how much each year of delay
could affect you? The more you delay, the more you would need to invest each
month to reach the targeted corpus.
For instance, (refer table below) to reach the targeted corpus of Rs 7 crore on
retirement, you need to invest Rs 11,000 each month into equity funds if you
start at 25 as against Rs 71,000 per month if you start at 40.
Investment Required to Reach 7 Crore Corpus
Assuming you invest in equity mutual funds @12% p.a. average return and bank Recurring
Deposit (RD) @ 6.5% p.a. post-tax return.

Starting Age

Monthly Investment Corpus- Bank RD

Corpus- Mutual Funds


Rs 11,000

Rs 1.76 Crore

Rs 7.07 Crore


Rs 20,500

Rs 2.26 Crore

Rs 7.16 Crore


Rs 71,000

Rs 3.48 Crore

Rs 7.02 Crore


Rs 3.05 Lakh

Rs 5.1 Crore

Rs 7.01 Crore

Use this calculator for your current scenario (ignore the symbol).

Unless you are sure of saving a few lakh every month, its a good idea to start

Your Simple Plan to Retire 7 Years Early

and Accumulate 10 Crore Rupees
Corpus When You Retire

You might be beginning to think that early retirement seems impossible. But
were here to help you. All you need to do is follow the 5 simple rules below:
Rule #1: Save First. Spend Later
This rule is pure common sense - but most uncommon among people. Save at
least 30% of your take-home salary and only then start spending your money.
To make it easier, set up an automated monthly investment, say, on the 7th of
every month, so that 30% of your income goes into an investment product
(mutual funds, stocks, bonds, deposits etc.)

To retire @ 53 years (7 years early) and accumulate a corpus of Rs 10 crore,

you need to invest as follows (assuming you have no prior investments)




Equity Mutual Funds



Savings Pre-Tax

Savings Post-Tax


Rs 24,000

Rs 3.64 Crore

Rs 2.29 Crore

Rs 10.04 Crore


Rs 49,000

Rs 4.51 Crore

Rs 3.12 Crore

Rs 10.01 Crore


Rs 2,30,000

Rs 6.82 Crore

Rs 5.64 Crore

Rs 10.18 Crore

Use this calculator for your current scenario (ignore the symbol). Equity mutual funds
@14% returns annualized. Traditional savings @9% pre-tax and 6.5% post-tax.

Rule #2: Invest in Equities for the Long Term

As could be seen from the table above, as you delay your investing decision,
your monthly investment requirement is going to skyrocket. For instance, a
five-year delay for a 20-year old could mean shelling Rs 12k more each month
till he or she turns 53.
Generally speaking, while the investment requirement (given in the table)
might seem large, the trick is to make your money work harder by investing in
assets that generate higher returns.
Equity (shares of companies) is one of the best options for you to generate
higher returns. While investing in equities directly might be complex, you can
always go with mutual funds, managed by professionals, which also invest into
equities on your behalf.
Rule #3: Avoid Debt- As Much As Possible
Any form of loan (or debt) will drive down your savings. You might think, The
EMI (on the loan) is small, I can manage to pay it off easily. However, in the
long-term, you are paying much more, thanks to higher interest on the loan

and the opportunity cost of not being able to invest that EMI amount into a
high yielding investment.
So reduce debt and cut down on unnecessary spending to save as much as
Rule #4: Invest Smartly In Various Assets

Most Indians prefer to invest their savings into real estate or gold. And if they
earn more savings, probably back again into second or third house.
While real estate and gold are indeed good assets to have in your portfolio,
getting all your money locked into a single asset class is very risky. You should
diversify and invest in other assets as well.
Equity, debt, bank deposits, bonds, corporate deposits are some of the
investment opportunities you should explore.
Remember: The riskier the investment is, the higher the return it could
potentially give. In the long run, equities have outperformed real estate and
bank deposit in terms of returns. Historically, equities have also given the

highest returns as against fixed deposit, which most of the times have even
failed to beat inflation.
Rule #5: Be Prepared For Unforeseen Events
One of the biggest mistake people all around the world make is considering
insurance as an investment. However, insurance is NOT an investment product
and only an instrument for mitigating risk.
While we make plans for 10 crore retirement corpus, have you thought of
what happens if something goes wrong in your plan? What if the sole bread
owner of the family passes away? The family still needs money to survive, but
there is no income to supplement it. Thats why you should be prepared for
such unforeseen events and take insurance (health and life).
We recommend you plain-vanilla term-insurance plans (which only provide life
cover) as against money-back plans (life cover plus investment) which usually
give you extremely low returns. You are better off investing the latter money in
other assets to generate higher returns.

If this is looking like too much work, we

have created a simple financial plan
which everyone can follow

Our Golden Nugget of Wisdom

While Rs 10 crore is a good amount to retire with, you can retire with much
less money. You could even retire with 1 crore of rupees or less, provided you
are willing to make necessary changes to your lifestyle.
The more you save and the less you spend, your expenditure goes down and
your savings go up. And if you adopt a frugal lifestyle, the faster you move
towards worry-free retirement (even while you are just 30 years old).
Its a lifestyle choice you have to make. Retire @53 yrs with several crore of
rupees to maintain your lifestyle or be frugal and retire even early (say when
you are 40) and adopt a simple lifestyle.
Assuming you are 30-year old, you can retire @40 yrs by investing Rs
50,000 every month. If you invest into equity mutual funds (which give you
an annualized return of 16%), you can get Rs 1.48 crore on retirement. Now, if you
invest this 1.48 crore of rupees on a safe instrument like bank FD, you will get Rs 1.35
lakh every month as interest (same purchasing power as roughly Rs 60,000 today).

Quick Recap
Start investing early
Invest at least 30% of your earnings every month without fail
Invest in high-yielding assets such as equity mutual funds
Diversify your portfolio- dont put all your eggs in one basket
While calculating investment returns, take into account the tax
implications (bank Fixed Deposits are taxable but long-term equity
mutual funds are tax free- so net return for both would be very
Take into account the time value of money. Rs 1 lakh in 2014 will be
worth only Rs 9,937.73 in the year 2044 (Inflation @ 8%p.a. )
Increase your investments by at least 10-15% every year
Avoid debt- as much as possible
Adopt a frugal lifestyle to retire early
Automate your investments - to regularize the process of investing and
to maintain investment discipline under different market conditions.

Mutual fund investments are subject to market risks. Please read scheme related documents carefully before
investing. Past performance is not an indicator of future performance.