Retiring before 50: Formula for how much you need

There are a few things that anyone planning to retire early must keep in mind. Everyone focuses on the number that you need, that challenge is nobody knows their own expiry date. Further, as life expectancy increases, the amount you need would also go up. With India being on a journey from a developing to a developed economy, it is unlikely that you would get a 12-15% return.

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Financial Independence, Retire Early - has now become bigger than just a buzzword.

Early retirement today is perhaps on every working professional’s mind, but the right way to get there still seems like a distant wish. There are several thumb rules when it comes to financial planning, but what about the early retirement formula ?

Well, there sure is a checklist, a guide you could follow if you are planning to retire early.

A panel of experts discussed the same at a discussion titled ‘Should you retire before 50?’ at the ET Wealth Expo 2026, where they revealed strategies individuals can employ to build a healthy retirement fund, and making it last 30-40 years!

Early retirement formula: How much corpus do you need?

Before delving into the math rule for planning early retirement, Feroze Azeez, Joint CEO, Anand Rathi Wealth Limited, talked about his realisation that the people who have not retired are the healthiest.

According to him, the checklist for early retirement consists of 2 items: the desire to retire and money. “If you have Rs 50,000 monthly expense today and you want to make sure your money outlives you, you will need Rs 1 crore and a good strategy.”

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Jointly owning property to save tax? Why married couples must also plan for ownership and inheritance If your monthly expense is Rs 1 lakh today, you will need Rs 2 crore as a retirement fund and still have money left to give to your children. For a Rs 5 lakh monthly expense, you will need to build a corpus of Rs 10 crore. Azeez stated that this formula is “age agnostic”, so it can be used by anyone.

Col Sanjeev Govila (Retd), CFP, CEO, Hum Fauji Initiatives, added that before calculating how much money you need, “calculate what is your purpose and corpus you are retiring to, what are you going to do?”

Broadly, if you have 250-300x your monthly expense, you can retire, suggested Ashish Shanker, Managing Director and CEO, Motilal Oswal Private Wealth. This means someone with a monthly expense of Rs 1 lakh now would need to plan for a retirement fund of Rs 2.5 crore.

Having said this, Shanker echoed what the other two panellists said: a person needs to have a purpose. “The idea is to find something you can do for many years, because with medical advancement, we are going to see people living much longer in times to come.”

“The biggest issue that happens in retirement is loss of identity,” Lovaii Navlakhi, CEO and MD, International Money Matters stressed.

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What to keep in mind when planning early retirement There are a few things that anyone planning to retire early must keep in mind. “Everyone focuses on the number that you need, that challenge is nobody knows their own expiry date,” said Lovaii Navlakhi, CEO and MD, International Money Matters.

Further, as life expectancy increases, the amount you need would also go up. Navlakhi also pointed out that India is on a journey from a developing to a developed economy, in which case inflation rates drop, growth rate numbers will drop, it is unlikely that you would get a 12-15% return.

“As we go ahead, there’s a structured way to plan. In Indian context, we have a higher inflation, so maybe you should take 3-3.5% withdrawal of your corpus which typically sustains over the next year,” stated Virendra Somwanshi, Country Head - Wealth Management and Bancassurance, Federal Bank.

With this, he also spoke about planning for the next 30-40 years from today. The retirement corpus number, he said, is just an option to decide if it will give the freedom to do something you wish to do later in life.

Are you financially independent?

Anand Rathi Wealth’s Azeez shares one math that all of us should do to understand this. “Whatever my desires are, if discounted till today, if that is less than my current net worth, then you are financially independent.” After gaining financial independence, you can become a passion income earner.

“When you stop working for money, money starts working for you. When you don’t pursue it, it comes to you with different velocity and acceleration,” he underlined.

So, when you are considering how big your retirement corpus should be, what should be the number of years you will be planning for? This is perhaps where many people go wrong.

International Money Matters’ Navlakhi reflected on how they take a life expectancy of 100 years into account when running the calculations for someone planning their retirement. This is “because we do not want your money to run out before you do. That's what financial independence is,” he said.

He explained: At the age of 50, you are going to need Rs 19 crore to last till you turn 100, if your monthly expense is Rs 5 lakh a month.

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REITs in India delivered around 16% annualised returns since 2019; 5 things to check before investing Bucket strategy for retirement Retirement planning is not about maximising how much portfolio you will have when you die but to make sure that you don't run out of money over the next 30-40 years.

What you do with that money is equally important, pointed out Federal Bank’s Somwanshi. He suggested keeping that money in 3 buckets:

Bucket 1 – It is your cash flow bucket, your contingency funds. So, over the next 12-36 months, that part of the money should go into income-generating assets, fixed income, fixed deposits, bonds, debt funds, so that the volatility is lower.

- The second part of the money can go into continuous growth, compounding. “Inflation is a demon which everybody has to deal with. Then that compounding effect to hedge inflation will come from your growth portfolio, which is primarily equity,” Somwanshi shared.

- It could be gold or alternatives which you want to put in, or let's say global assets, which is your diversification.

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“If you plan these three buckets after you have that pot of money and then have a strategy in place, I think it'll bring a lot more mental peace for you,” he added.et (Join our ETWealth WhatsApp channel for all the latest updates)

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