Thursday, June 1, 2023
HomeMutual FundWhy I had to postpone my plan for early retirement

Why I had to postpone my plan for early retirement


In this article, reader Sampath explains why he had to postpone his plans for early retirement. His story is a lesson that we must be ready to adapt to the ups and downs of life.

Dear freefincal readers, my name is Sampath. I will be 47 in Jan 2023. I have always been fascinated by early retirement but was confused about its meaning and how to go about it.

Thanks to the enormous literature available at freefincal and their robo-advisory tool, I understood how to plan for early retirement and what to do afterwards. For instance, I realised that “early retirement is only from a salaried existence and not from gainful employment”.

For the last six years, I have been planning what I want to do after I quit my salaried job. I studied the lifestyle of several online entrepreneurs and figured out how to run an online business with minimal overheads.

I invested more than twice my monthly expenses in an aggressive (60% equity) portfolio for the last 10+ years, driving the growth in my retirement portfolio.

A few months ago, I went past 45X. My retirement corpus was 45 times my annual expenses (X). So I was all ready to take the plunge and quit my job. I even started mentally framing my resignation letter.

I wanted to double-check the plan one more time. Two things happened.

(1) As my wife and I sat down to review the plan, we noticed that our annual expenses had increased by about 17% (compared to what I assumed it was). We made the mistake of assuming our existence was always frugal. Over the last few years, as my salary grew, we embraced new technology and gadgets.

This meant my retirement corpus was only 38X and not 45X as I had imagined. The inverse of this corpus multiple is the initial withdrawal rate. At 45X, the rate was 2.2%, and at 39X, it increases to 2.6%

It is still comfortable and something I could retire with, but it scared me. I berated myself for making such a huge error. I should have taken the pains to find out my monthly expenses each year and fed that into the Robo-advisory tool.

My wife asked if I was sure about quitting. I was because I was already getting a side income from digital product sales close to updated monthly expenses after tax. If I quit, I would have time to offer consultancy services, and we could comfortably manage without touching our accumulated corpus except for emergencies.

(2) At this time, something unspeakable occurred to one of my relatives. Suddenly their income sources stopped, and they had no way to fund their child’s future expenses. We had to step in and help them out. There was no question about this because my late uncle (the child’s grandfather) had helped my family so many times before. I could not live with myself if we did not help now. Thankfully my wife came to the same decision even before I did.

This meant a big change in my financial situation. My annual expenses increased, and my retirement corpus will also deplete by some amount. I expect my initial withdrawal rate to increase by at least 1% to 3.6% – 4%.

Although I can still manage expenses with my consultancy, I am no longer confident about quitting my job. So I have decided to postpone retirement by three years which I hope is enough time for me to settle my nephew’s affairs. I will be 50 by then, so it will no longer be an “early” retirement!

I wanted to share this story with freefincal readers for two reasons: (1) Always review your plan with current data. Do not take any of the inputs or assumptions for granted. (2) The saying, “Man proposes, God disposes”, came true in my life. However, this does not mean all planning is useless. Inspite of these setbacks, I am still in a good place because of planning and implementation, just that we should not assume that everything will go to plan and be ready to adapt.

Do share this article with your friends using the buttons below.


🔥Enjoy massive discounts on our courses and robo-advisory tool! 🔥


Use our Robo-advisory Excel Tool for a start-to-finish financial plan! More than 1000 investors and advisors use this!


New Tool! => Track your mutual funds and stocks investments with this Google Sheet!


  • Follow us on Google News.
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Join our YouTube Community and explore more than 1000 videos!
  • Have a question? Subscribe to our newsletter with this form.
  • Hit ‘reply’ to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Get free money management solutions delivered to your mailbox! Subscribe to get posts via email!


Explore the site! Search among our 2000+ articles for information and insight!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.


Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.


Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   


Our new book for kids: “Chinchu gets a superpower!” is now available!

Both boy and girl version covers of Chinchu gets a superpower
Both boy and girl version covers of Chinchu gets a superpower.

Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!

Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!

Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. – Arun.

Buy the book: Chinchu gets a superpower for your child!


How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!


Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or you buy the new Tactical Buy/Sell timing tool!


We publish monthly mutual fund screeners and momentum, low volatility stock screeners.


About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)


Connect with us on social media


Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.


Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.


Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)


 



RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -
Google search engine

Most Popular

Recent Comments