Many people might have some retirement plan but retiring early can be tricky if we don't plan our retirement corpus properly. We should have a proper liquid corpus in mind to think about retirement. Today I was discussing with someone who wanted to retire in another 10 years. They have no idea what retirement is all about. Currently, they cannot even manage their expenses properly with what they are earning right now and have not been able to save anything yet.
The discussion continued and I was explaining her about the need for the corpus fund before retiring. That's when I thought the corpus need keeps increasing every year. I remember that 10 years back I was thinking just 1 crore should be sufficient to live a good life with the passive income from the corpus. Today even if we have 5 crore it may not be sufficient I guess. To be safe with all basic needs we might at least need 3 crore in India. And it also depends on which city we would like to live in. If our life is going to be in a small town or village, the monetary need will be very small.
There is inflation and every year the value of the money is also depreciating. Some people suggested cryptocurrencies as an alternative for the regular FIAT just for this very reason. If the value of a crypto is down right now, it might increase when there is a bull market. But this is not the case with regular FIAT. The value is greatly affected due to inflation and it never recovers back and becomes cheap again. The government will keep printing new money increasing inflation even further.
The value of something 10 years back will either be double or triple and if we have had the same amount of money we had 10 years back, the item that we are planning to purchase may no longer be affordable. This is the effect of inflation.
We need to have a proper saving habit. It can be a risk-based investment or a regular investment that sits safely in an FD and provides the passive income we need. Only the amount of money we save regularly becomes the safe corpus fund that will help us retire early. After working for several years in a day job, if we don't have enough money saved, we might end up being in a debt trap and we may not be able to reach the retirement corpus we might need.
Getting into debt is okay but at the same time, we have to make sure we are moving our funds into savings too. If we don't save enough then we might get out of debt but we may not have enough corpus fund with us. Many successful people who have retired early have said that they had focused on increasing their corpus funds and looking at how much safe passive income their corpus funds were creating for them.
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