With increasing stress in our day-to-day life, retiring early is a dream that many cherish, but few are able to realize. K.S. Kumar is one of those few. He retired six months ago at 56, four years before he was supposed to. Just like many of us, Kumar, too, was never sure he would be able to make it, until he met his financial planner, Lovaii Navlakhi. Says Kumar: "I wanted to retire early, but it was only after consulting my planner and seeking his assurance that I took the call."
Though he got on to the planning platform at 50, he professes that one should do it early in life. Besides planning early retirement, Kumar was able to solve various other problems with the help of the planner.
Tax saving: Earlier, he invested primarily to save tax. So he bought National Savings Certificate, insurance and had a Public Provident Fund.
Debt heavy: Kumar's portfolio had no exposure to the equity market at all. He says: "It was not as if I was averse to the equity market or didn't trust it. I just felt that you need to be able to track the markets regularly and need to have some knowledge to figure out which companies will do well in the long run and which stocks will yield good returns."
Diversification: The first thing that the planner told Kumar was to spread his investments. The planner introduced equities in his portfolio through mutual funds.
Adequate insurance: Earlier, Kumar banked on the insurance his employer provided him with. He now has separate life and medical insurance policies.
Prioritizing: The planner helped Kumar prioritize his expense and repayments. "I had a home loan which I was repaying as per the lenders plan, but we prioritized it and used funds to prepay the loan instead of investing them separately."
Portfolio realignment: On retirement, employees get some lump sum benefits that they accumulate during the working years. When Kumar retired, the planner helped him realign his portfolio according to his reduced risk appetite. "We invested the lump sum amount in low-risk avenues and rearranged the debt and equity instruments in such a way that the ratio was 60:40. Earlier, the ratio was exactly opposite."
Future planning: Kumar is aware of his short- and long-term goals, such as marriage of daughters, and has set aside money accordingly. "My planner helped me do backward calculations," he says.
Even before taking early retirement, Kumar had to take stock. "We realized that I would have to work for another year to be on the safer side," he says
With his finances taken care of, Kumar is enjoying a relaxed retirement and a longer one at that. "When you know your finances are secure, it leaves you relaxed and brings along a comfort level."
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