How to retire at 45

Gokul, a dynamic 32-year-old project manager at a prestigious IT firm, has charted a clear course for his future: early retirement at 45. His vision extends beyond the confines of his corporate career, and wants to start his own blog. At the heart of his plans is his family - his wife, who manages the household and their five-year-old son. As the sole breadwinner, Gokul brings home a monthly salary of Rs 1.2 lakh, which comfortably covers their monthly expenses of around Rs 80,000 and leaves enough room for life's little luxuries. But given his circumstances, can he afford to retire early? Let's find out. His son's higher education Parents want to provide their children with the best education they can. And Gokul is no different. He wants to allocate Rs 15 lakh for his son's higher education. However, given the average inflation rate of 6 per cent in India, the same Rs 15 lakh course will likely balloon to around Rs 32 lakh in 13 years. Fortunately, Gokul has the means to cover this cost, as he has accumulated Rs 7.5 lakh in a few tax-saving mutual fund schemes . This amount will grow to the desired amount by the time his son gets out of school, assuming his investment increases 12 per cent each year. Calculating retirement corpus Since Gokul has a monthly expense of Rs 80,000 and wants to retire by 45, he'll need to save a little more than Rs 5 crore. We arrived at this figure based on three assumptions: That he and his wife live until 85. The average inflation rate in their post-retirement years is 6 per cent. That they ensure their nest egg (roughly Rs 5 crore) grows at 9 per cent during their retirement years.

This article was originally published on August 28, 2023.