Planning for early retirement has become a rising trend, especially among individuals who want to enjoy life while they are still in their prime. Whether you are working in a job, running a business, or engaged in any occupation, having a well-structured financial plan is essential if you wish to retire early and enjoy life comfortably. A goal of building a ₹5 crore corpus by the age of 50 is achievable with the right investment strategies. Below, we outline three approaches based on age and investment capacity, which you can use to reach this financial milestone.
Strategy 1: Starting at Age 25
If you are 25 years old and looking to retire by 50, you have 24 years to build your ₹5 crore fund. To achieve this, you need to save ₹1.92 lakh annually or ₹16,042 per month. Assuming an annual return rate of 10%, maintaining this disciplined monthly saving will allow you to reach your retirement goal comfortably. The advantage here is that you have a longer time frame, so the power of compounding will work significantly in your favor.
Strategy 2: Starting at Age 30
For individuals who are 30 years old, there are 19 years left until the desired retirement age of 50. In this case, to accumulate a ₹5 crore corpus, you will need to save ₹4 lakh annually, which translates to a monthly investment of ₹33,333. This would require a more aggressive savings plan as the time horizon is shorter compared to someone starting at 25. You should aim to save around 30% of your monthly income if you are earning around ₹1 lakh per month. It’s crucial to start as soon as possible since the longer you wait, the more you’ll need to invest to meet the same goal.
Strategy 3: Starting at Age 35
At 35, achieving a ₹5 crore corpus by 50 becomes more challenging due to the shorter timeframe of just 14 years. You will need to save ₹8.85 lakh annually or ₹73,750 monthly to reach this goal. With an assumed 10% annual return, your investment will grow to the desired amount. This strategy requires a higher monthly investment, making it crucial to reduce unnecessary expenses and prioritize saving for your future.
Why Consider an Average Return of 10%?
In these strategies, a 10% average return has been used as a benchmark considering the current financial environment. However, as you age, the expected returns tend to change due to factors such as investment type, risk tolerance, and time remaining until retirement. Generally, financial experts consider:
Up to age 40
- A 12% return is achievable with a more aggressive investment approach.
- Between 41-45 years: Returns usually moderate to around 9%.
- Between 46-50 years: A more conservative return of around 7% is considered due to lower risk tolerance.
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Positive Takeaway
Achieving a ₹5 crore retirement corpus by the age of 50 is a realistic goal if approached with a well-defined strategy. The key lies in starting early, investing consistently, and choosing an investment strategy aligned with your age and financial capacity. Whether you start at 25, 30, or 35, with proper planning and disciplined investing, early retirement and financial freedom can be within reach.
