Live Well, Retire Well: A Practical Approach to Financial Planning
- If you’re intrigued by the idea of early retirement and financial freedom but find it daunting or unrealistic, this article is for you.
- It’s especially helpful for those in the early or middle stages of their career, struggling to balance present enjoyment with future financial security.
- This piece will guide you on how to realistically aim for a balanced life—enjoying today while planning for a comfortable retirement.
- It offers practical advice on saving, investing, and personal growth, making the dream of “live well, retire well” achievable for everyone, not just a lucky few.
You’ve probably heard the terms “retire early” and “financial freedom.” These concepts sound wonderful, but for 99% of people, they remain just dreams. Instead, it’s more realistic to aim for “live well, retire well,” a goal everyone can achieve.
In financial planning, dreaming of early retirement isn’t wrong. However, achieving this dream is nearly impossible for the vast majority of people. Only about 1%, or even less, can actually retire early and enjoy financial freedom. For the remaining 99%, this dream is unattainable.
To truly retire early, two things are essential:
- Sufficient Wealth: You need enough money to support you for the rest of your life without worrying about running out of funds.
- Clear Post-Retirement Plans: You must know exactly how you’ll spend your time after retiring.
Consider the typical retirement age of around 60 years. If you plan to retire at 35, you must have clear answers to both of the above points. Without them, the concept of early retirement is flawed.
Most people inspired by early retirement and financial freedom don’t know where they’ll get the necessary funds or what they’ll do after retiring. If you can’t answer these questions, the concept is impossible to achieve.
So, who can actually achieve early retirement? It’s usually a tiny fraction of people selected by sheer luck or chance. For example, winning a big lottery is a random event. Another group might include exceptionally brilliant individuals who find the right opportunities at the right time, like the founders of companies such as Infosys or Facebook. These are rare cases where brilliance meets the right circumstances.
Inheritance can also provide the necessary funds. Children of very wealthy people might have enough money to retire early. However, this is an extremely small group. For the vast majority, life is an evolutionary process. You must go through it step by step.
Understanding that most people need to go through this process helps you do things the right way. Instead of dreaming of early retirement, aim for living well and retiring well. This goal is achievable for everyone with the right approach.
The Evolutionary Process of Life
Let’s focus on the middle third of your life—the earning phase, after you’ve completed your education and started your career. This phase is divided into two parts: the early phase and the mature phase.
Early Phase (Up to 45 Years)
In the early phase, you’ve just started your job or business. You’re probably earning a lower salary and facing various challenges. You have many aspirations—traveling, dining out, and experiencing life—but financial constraints make it tough. Instead of worrying about your low earnings, focus on enjoying life and learn from nature.
Think of your earnings as a fruit. A fruit has two parts: the edible pulp and the seed. Enjoy most of your earnings (the pulp) and save a small portion (the seed). Invest this saved portion wisely. Starting early allows the power of compounding to work in your favor. Even small savings can grow significantly over 30 years.
Avoid the temptation of trying to get rich quickly, which is against the natural course of life. Taking excessive risks often leads to failure. Instead, save and invest consistently, letting time and compounding grow your wealth. Enjoy the present and appreciate the gift of each day.
Mature Phase (45 to 60 Years)
By the time you reach 45, if you’ve saved and invested wisely, you’ll have achieved many of your life goals. You’ll likely have a stable job, a home, and your children’s education secured. This sets the stage for a smooth and fulfilling mature phase.
Nature’s Lesson
Nature teaches us that life is a balance. Just as a fruit provides nourishment now and seeds for the future, your earnings should be used for present enjoyment and future security. Trying to achieve everything too quickly often leads to mid-life crises. Instead, progress gradually and sustainably.
Living Well and Retiring Well
- Enjoy the Present: Each day is a gift. Live in the moment and make the most of it.
- Save Wisely: Save a small portion of your earnings and invest it. Don’t over-save at the expense of your current happiness.
- Invest Smartly: Let the power of compounding grow your savings. Start early and invest wisely.
- Build Skills: Improve your skills and advance in your career. This will help increase your earnings over time.
- Plan for the Future: Set clear goals and work towards them step by step.
By following these steps, you can live well and retire well. It’s a sustainable approach that ensures both financial security and happiness.
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At NRI Money Clinic, we specialize in helping people plan for a secure and fulfilling retirement. We guide you through the complex process of planning, execution, and achieving financial goals. If you need professional help to build a secure retirement customised just for you, feel free to reach out to us at anytime, any day, anywhere!
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