According to Vikas Puri, Senior Partner at Complete Circle Capital, and Kirttan Shah, Founder & CEO at Truvanta Wealth, speaking with Zee Business, individuals working for 30-35 years need to prepare for their financial requirements, which may go up to 50-60 years since they can potentially live for 80-85 years. This extended time horizon makes early and disciplined investing essential for retirement planning. The earlier you plan to stop working, the shorter the time horizon to save, and early retirees often need to save even more to sustain their lifestyle over a longer period. As per recent guidance, it's not uncommon for those seeking to retire early to save up to 50% (or more) of their income during their working years, compared to the common benchmark of 10-20% of gross income for traditional retirement planning. Recent analysis suggests that the investment portfolio of a 45-year-old retiree will look very different from that of a 65-year-old retiree, with younger retirees requiring more income streams to fund and sustain their lifestyle.
Puri emphasized that one should begin early, even with a small amount, as this can help develop a substantial retirement savings account through the power of compounding. He pointed out that even a monthly SIP of ₹10,000, for about 30 years on the assumption that one will earn 12 per cent annually, could possibly result in an accumulation of more than ₹3 crores. The rate of inflation plays an important role in reducing purchasing power, as illustrated by his statement that an expenditure of ₹60,000 per month could eventually reach the level of ₹2–3 lakhs in future. Recent analysis suggests that the investment portfolio of a 45-year-old retiree will look very different from that of a 65-year-old retiree, with younger retirees requiring more income streams to fund and sustain their lifestyle. According to Fidelity, saving 15% of pre-tax income annually (assuming median income of ₹45,140) would result in ₹6,771 annually or ₹564 monthly, nearly doubling the savings by starting at age 25 versus 35.
Experts stressed that there is no one-size-fits-all rule, and allocations should be aligned with an individual's risk appetite, financial goals, and time horizon. In your 20s: Puri suggested that investors in their mid-20s can allocate 90 per cent or more to equity, given the long time horizon and ability to absorb volatility. In your 30s: He recommended 70–80 per cent equity and 20–30 per cent debt, with 20–30 years remaining until retirement. In your 40s: Puri advised 60–70 per cent equity and 30–40 per cent debt, while the time horizon reduces. In your 50s: He suggested a balanced mix of around 45–55 per cent equity, with the rest in debt. At 60 or later: Even late starters should maintain 30–35 per cent equity exposure. Recent guidance emphasizes that early retirees should consider investments and insurance solutions that align with their early retirement goals, including assets that can provide passive income such as real estate, tax-exempt bonds, U.S. Treasuries and dividend-paying stocks. Barry Cothran, president of Vision and Hope Financial, demonstrated this strategy by starting at age 36 with minimal contributions and gradually increasing to 1% annual increases for 17 years, resulting in a seven-figure portfolio.
According to Puri, real returns matter more than nominal returns, explaining that if returns are around 10 per cent and inflation is 5–6 per cent, the real return is only about 4 per cent. Hence, a higher allocation to equity is necessary, especially when the investment horizon is long. Shah stressed that an investor should gradually decrease his investment in stocks as he gets closer to retirement, with aggressive investors keeping their investment in equity at 70–80 per cent till age 55 and thereafter gradually shifting to fixed income instruments. Recent analysis suggests that when planning for early retirement, it's smart to seek guidance from a financial advisor who can help understand options and decide on a strategy that makes sense for the individual's specific circumstances. The historical context shows that since 1957, the average annual stock market return has been 10.51%, adjusted for inflation to approximately 6.65%.
Shah stated that National Pension System (NPS) has become very appealing since it now permits high equity investment (upto 75 to 100 per cent in certain schemes), in addition to tax advantages, along with automatic allocation of investments using lifecycle funds. However, he noted that there was one drawback associated with NPS as well because upon maturity, although one may withdraw up to 60 per cent of the accumulated amount tax free, at least 20 per cent had to be invested in an annuity, which provides relatively lower returns. Recent guidance suggests that when planning for early retirement, it's important to go beyond traditional retirement accounts and incorporate taxable brokerage accounts into your investment strategy, as these accounts don't have limitations on when you can withdraw assets or how much you can contribute, providing the flexibility and liquidity needed for early retirement. The analysis shows that starting at age 25 versus 35 can realistically mean ending up with close to double by retirement, even if the monthly amount is the same, due to the compounding effect of time.
