The FIRE movement, which promotes financial independence and early retirement, advocates significant savings up to 70% so that an investor can retire in their forties. Hence age 45-50 is seen as the new retirement age. If you plan to retire at 45, you should keep the following points in mind:
Increase Savings
If you are 30 years old and want to retire by 45, you would need to accumulate enough funds to last 30 years after that. Your annual savings should be nearly 70% of your total earnings 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 jeopardise your investment strategy.
Keep an eye on expenses
Remember that your saving pattern should correspond to your spending pattern. As a result, your quality of life after retirement will be nearly identical to your quality of life before you hang up your boots. The savings should be such that they can beat inflation and you will not have to compromise on your retirement expenses.
Extra money for vacations
If you want to travel a lot after retirement, you can save money separately for that. You can do some 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.
Withdraw only a fixed amount
After retirement, you should withdraw only a fixed amount from the fund. You can do this at 3% of your fund annually. The remaining money should be invested so that it continues to grow. This way your funds will last for a long period of time.
Hence, before planning an early retirement keep these things in mind.