Many young professionals today are working hard towards the goal of financial independence and retiring early (or FIRE). This is a growing new idea. The main idea of FIRE is that instead of working until the official retirement age of 58 or 60 in most companies, you save and invest in a way that generates enough funds to live on, rather than relying solely on salary.

FIRE is a new concept in India and it is not easy to implement. Let's look at some ways to achieve this goal of retiring early.

Start early

Start walking towards this goal with discipline at the initial stage; give your money enough time to create wealth and take advantage of the power of compounding consistently.

Take into account inflation, lifestyle and health costs.

To arrive at what the corpus should be for early retirement, you need to consider different factors such as inflation, healthcare, cost of higher or foreign education for children, cost of marriage of children, maintaining the current lifestyle of the family, and annual planning. What should be considered are the periods of vacation, the calculation of life expectancy, and the age at which the retirement corpus is exhausted.

"There will be other factors which are likely to come in as recurring costs. For example, a new house, a new car, etc. These recurring expenses need to be factored in while thinking about your retirement corpus, "says Vishal Dhawan, founder and CEO, Plan Ahead Wealth Advisors.

Steps to build an early retirement corpus

Create an Excel template and list the actual costs. This includes the cost of house rent, medicines, insurance premium, monthly groceries, utility bills, entertainment, income taxes, etc "While calculating your retirement corpus, it is better to identify the actual expenses of the last two years without calculating circular numbers. " Dhawan says. Next, figure out which of these expenses will increase or decrease when you retire.

Invest in the right tools.

An investment made only for a retirement corpus may be in equity for a longer period of time to reach the target corpus. The equity component in the portfolio should be strong as it has a long life, "says Kalpesh Ashar, founder, Full Circle Financial Planners and Advisors.

"Don't take unnecessary risks, if you invest in speculative investments or cryptocurrencies or foreign investments and lose, you are not going to be financially independent," says Rishi Piparia, author and financial advisor. Set aside a retirement corpus and don't gamble with it in the post-retirement equity market, he adds.

"You need to plan the portfolio strategy at the pre-retirement stage and post-retirement stage," says Dhawan. If you're running a conservative strategy during these two phases, you may need a larger corpus when you retire to pay for your living expenses, he adds.

Considering the actual annual expenses, future goals and life expectancy of 80-85 years, assume that you want to retire at the age of 50 and the required corpus is Rs 5 crore. If you start saving at the age of 30, the monthly investment will be Rs 33,333 and if you start saving at the age of 35, the monthly investment will more than double to Rs 73,750.

Stick to your insurance plans.

If you have someone who depends on your income, it's important to continue with a term plan. "It's not expensive and it's a good safety net to continue even after retirement," says Piparaiah. If you plan to get outstanding loans after your retirement, you will need to continue with term insurance to cover the liabilities.

Adequate separate health insurance for elderly dependent parents and a floater plan including your spouse and children is very important, especially for anyone who is retired. "While calculating the retirement corpus, keep in mind the premiums to be paid for these insurance policies," says Usher.

Pay off outstanding debt

"In the post-retirement age, there will be many expenses to take care of as there is no fixed source of income. So, one should clear all the loans and liabilities before that as it is difficult for a person to pay an EMI from the corpus at the post-retirement age, "says Usher.