Over a cup of coffee, my friend complains about the hectic schedule that governs his life and does not give him time for the things that truly matter to him. When I ask what truly matters to him, he shares, “Spending time with my son and family, spending time with friends, crossing things off my travel list…” Recognizing that usually people have the privilege to make these activities a priority only during retirement,…” I interrupt only to ask the important question, “So when do you want to retire?” “As soon as possible!” he says. 

Contrary to this popular answer, retiring as soon as possible isn’t all that easy.

At Vayasu, once we had asked people, what does retirement mean to them. Unanimously everyone responded, “Retirement is finally the time when I can do whatever I want.” Even those planning to retire at 40, echoed this sentiment. But unsurprisingly, every respondents’ ‘retirement plan’ was limited to planning their financial security alone. A 2020 study called the ‘Retirement Readiness Survey’ found that 51% of urban Indians do not have a retirement plan. And they expect to start planning at the age of 51. Of the 49% who do have a plan, the average age when planning starts is 33. And the plan involves only financial goals and expected expenses.

This conventional approach to retirement planning is incomplete. Besides planning for a financially secure lifestyle, you also need to plan and prepare for appropriate mental & physical wellness, healthy and active routines, supportive social and care providing circles and timely opportunities. All of these, to make retirement life joyous AND meaningful as opposed to one that is steered by boredom and awaiting life to happen.

Mindful of this extent of deliberation required in planning and preparing for a meaningful and financially secure retirement life,

“when is it ideal to retire?”

Contrary to conventional norms and expectations, some experts suggest that we prepare to retire earlier, between 41 and 45 years old. This, for multiple reasons:

• One, the wiser (older) you grow, the less profitable your decisions become. Largely because of the shifts in needs, opportunities, lifestyle and perspectives. At 41-45, however, you are more defiant, optimally ambitious, most likely in surplus, and opportunities welcome you.
• Two, multiple studies have shown positive correlations between early retirement and healthy ageing & longer lifespan. Probably because finally self care takes precedence over professional needs.
• And lastly, with an early retirement you have the wealth, health and time to rummage through that bucket list before more dust settles on it.

So my friend’s response on his ideal retirement age wasn’t entirely impractical.

If you are in your 30s, looking to retire in your 40s, check out the FIRE strategy we had shared here. If you are in your 40s and later, wanting to retire as soon as possible like my friend, come let us figure out the other question that constantly lingers

–  the ‘how’ –

“How much money is enough?” “How do I know that now I can afford to retire earlier?” ”Without work, how can I make my retirement life more meaningful?”

The answer is non-linear and hyper-personalised.

In this essay, we share some factors to consider, to help you find your own ‘how’:

1. Minimum years of earning = years of your education
   A lot of us have invested huge sums of money in our education to get to a place that we can call “better” in our careers. Having invested time and money in our education, it is worthwhile to earn for at least as many years as you have studied. Add an equal number of years if the beginning of your career is spent taking care of education debt or you earned below payscale for whatever reason.
2. Become debt free at the time of your retirement
   Family obligations and lifestyle expectations make us stretch our budget and we often find ourselves with loan(s) to payback. Whether it is a home loan, car loan or a personal loan, your retirement should be a time when debt doesn’t have a role in your life.
   
   For your retirement lifestyle to sustain, you need wealth to last. Your wealth and your lifestyle at its expense, is held by 3 pillars: liquidity, growth and regular income. If you choose to work post retirement, most likely your income would be lesser than what it was pre-retirement. Many also do not work post-retirement. Then your income (new cash inflow) is limited to interests from your savings. Your growth instruments will as well be reduced. In this scenario, keeping expenses at bay becomes very important. Debt, particularly in this phase of life, is a high cost drain that impacts your retirement lifestyle plans.
   

   As Gaurav Mashruwala, practising financial planner puts it,
   “Interest (on loan) is an expense for you and income for the lending institution.”

   Especially at the time of your retirement when you chose to do what you want to do, why use your income to generate income for someone else?

3. Pre-plan to avoid hefty expenses post retirement
   Buying a house in one’s lifetime is one of the major expenses experienced. Owning a house removes the need for earned money to be spent on rent. Many Indians buy a house for the purposes of investment. And by the time they decide to gain from the investment to finally buy one that they want to live in, it is a little late. And the cost tends to eat into one’s own retirement corpus – which is an unwise approach. Better to stand the ground, take the time to scope and expend in a house you WILL to live in. Perceiving a house as an expense rather than investment and choosing other growth instruments (stocks, MFs, etc) to invest in helps avoid one key hefty expense post retirement.
   
4. Plan & prepare for retirement even in the face of dependents and responsibilities
   The India Retirement Index Study, 2021, by Max Life found that, more Indians are worried about loneliness during retirement and prefer to live along with their children. This, even as more and more nuclear families are on the rise. In fact, 39% believe their children will take care of them. This dependency need and expectation is often found to be a barrier to them investing and financial planning for their own retirement.
   
   As providers and caregivers, while a very strong reason to retire is to spend the time we have with our loved ones (kids, ageing parents etc), a very strong reason not to retire is also the same. We want to give the best life to the ones we love and that includes our kids, spouse and our parents. But our responsibility to dependents need not be the reason for us to not plan to retire. There are tools, people and tribes to support you through this journey and decision. Leveraging all the support to live the life you want is worth the consideration.
5. It is ok to choose to retire even if you love your job
   There are those of you who love your jobs! Why would you retire? You may ask yourself. But then, remember those many other things that you might want to spend our time on but do not have the time and energy now? Retirement is a safe space to act on those other loves and desires. 
6. It is wise to build an alternative or passive income
   One common mistake retirement planners make and early retirees practice is, having no real agenda for the days of retirement. In the name of retired life, spending days at the beach or reading a newspaper and going for walks with no real agenda is a common practice, yes. However, such a practice fails to recognise its detrimental impact on the physical and mental health of the retirees. Studies have shown that it leads to partial identity disorientation, disengagement, loneliness and frantic responses to find meaning and relevance. It aids with faster brain deterioration as the brain is not activated enough with complex and stimulating experiences and decision making – something it is used to during the earlier decades of work and responsibilities.
   
   A proven way to counter this is finding a passive income source. Even when you divide your day among the things that you always wanted to spend time with, find a way to earn any amount of money where you expend less effort, time and energy than before. It helps set a routine. It also helps with staying socially relevant and connected.
   
   In fact, the Retirement Readiness Survey mentioned earlier found that over 50% of Indians already seek and develop alternative income sources. And of them, 66% feel they are financially prepared for retirement as compared to those who do not have any alternative income source.
   
   So then,  where can you find your passive, alternative income? Hobbies. Advancing with your hobbies and earning from them is fun, achievable and something culturally different for us Indians. During adult life, most Indians are conditioned to focus on work and family. So your hobbies and extracurricular activities take a back seat. Maybe it is time to change that, for the sake of a better retirement life. Hobby activities as well take time to develop in you, for you to be able to earn out of it. That means your hobby skills need to be nurtured from years before your retirement date. If you don’t have or don’t know your hobby, explore new and interesting experiences. Pick something you like first and then seek advice to smartly monetise it.
   
   Once we have identified ourselves, the idea of doing something to generate a passive income stream when we retire will come easily. One can consult or some companies even allow workers to work on projects on a project basis.
7. Your current health and future healthcare costs depend on your choices today
   Health risks to self, spouse and kin is one of the predominant concerns leading up to retirement life. Studies have found, in some cases health concerns supersedes financial concerns. Yet contradicting one’s own risks and concerns, the Max Life Study for example found that only 40% of the urban Indians surveyed indulged in fitness activities and health promotion rituals (regular health checkups) were limited to 55%.
   
   From insurance to savings and capital market investments, health targeted financial goals and management is a must and commonly followed approach to prepare for health needs. But, if you move your focus beyond financial stability associated with health, what else do you see that is within your sphere of control?
   
   The habits that you choose to pick up.
   <Over 80-90% of disease burden, globally, is attributable to one’s lifestyle habits. Key modalities of these habits include: personal fitness,tobacco use, self care and mental wellness.>>
   
   The habits you pick up now will be conditioned responses by the time you grow wiser. The more healthy habits you pick up now, the healthier your quality of life in your wisdom decades and  the more confident you will be about retiring early. And voila! Maybe reduces healthcare costs as well!
8. Nurturing human connections is as important as financial security and healthcare
   In India, the wiser you grow, the farther your social meetups. We have a cultural conditioning to prioritise family. Which is fine, but not at the expense of your social connection. Regular and meaningful social connections not only improve mental health, they contribute to extended quality lifespan and help experience meaningful retirement days.
   
   In fact, there are three layers of social connections that you can build:
   1. Your close loop: These mostly include your immediate kith and kin with whom you are mutually loyal, loved and available for at any time.
   2. Your orbit: These are people like you. You share interests (say sports), you are part of the same groups and communities, et al. People in your orbit will be loyal to the tribe more than you can an individual. The channel to rely on each other is open, but not soldered.
   3. Your universe: These include acquaintances. They may not share your interests. You have met one or you are meeting someone for the first. And you just stay in touch, catch-up regularly, say once in a quarter or once in 6-months, with no set agenda. You may become friends or not. At times of need, you may be able to help each other or not. No obligations or expectations. You just stay in touch. It is an open relationship.

Most of us are used to only the first two layers. We are conditioned to not expend efforts on the third layer of connections. It may seem awkward, weird and maybe illogical and with no reason. But the harsh fact is, all layers of social connections are important to nurture.

Humans are social beings. We do not and should not need reasons to be social with others. These connections are our lifelines and support systems at times of need. Even when we do not have a need, these social connections positively influence in many non-conscious ways. And they need decades of effort to nurture through shared routines and rituals. So better start now.

Whether you retire early or late, post-retirement is particularly a phase of life when your social connections become your nucleus from which you derive your energy, meaning and purpose from.

—

We have said this before. We will say it again:

“Reaching a wiser (older) age need not be a cue to retire. And retirement need not be a function of reaching a certain age. We can choose to never retire or we can choose to retire early, late or at the culturally designated age. Retirement is a social construct, not a biological necessity.”

However, in the event you are choosing to retire, queries of “where to invest” or “how much to invest” come later. Before that, answer to yourself, “why retire?” “when do I retire” and “what is the best way for me (the how) to retire”.  These basic questions determine the quality of your meaningful retirement days.