Retirement Planning via One-time Investment: What is retirement? Is there any fixed age for retirement? In India, the public sector companies have 60 years as the retirement age, so we assume that this is a fixed retirement age for all Indians. But retirement is a stage when one becomes financially free. When they do not need to earn money for their expenses, as those will be covered from the passive income of their investment. But if we are seeking an early retirement, or retirement at 60, the preparation should be started early.

An early start can give one an edge of compound growth compared to a late beginner.

A small amount can create a sizeable corpus if one starts to invest early and lets their investment grow over the years.

Even a one-time investment of Rs 5,50,000 can balloon to Rs 1,85,00,000, creating a corpus that may take care of many of your retirement expenses.

But in how many years is this growth possible? Know here!

What is financial freedom?

Financial freedom is a stage when you have a retirement corpus or sources of income which can help run your lifelong expenses through return.

Expenses for financial freedom also include your other post-retirement financial goals.

Once you achieve that stage, you don’t need to earn for your daily expenses.

However, you can continue earning for other reasons.

What is ideal retirement age?

Retirement age means to be financially free in your life.

It’s your choice how soon or late you want to be financially free.

If you aspire to retire early, you need to start investing or creating income sources early in your life.

So, there is no ideal or fixed age for retirement.

Some people want to retire in their 40s, some in their 50s, and others in their 60s.

However, if you want an early retirement, you should start preparing for it early in your life.

What’s benefit of starting to invest early?

The early starter can get more years for compound growth of their investments compared to a late beginner. Let’s understand it with an example.

A and B have the capacity to start a Rs 15,000 monthly SIP investment each.

A is 20 years old, and B is 30. Both want to retire at 50.

Both expect a 12 per cent annualised return from their investments.

Let’s see what their estimated corpus will be at 50 years of age.

A will have 30 years for investment.

Their total investment will be Rs 54,00,000, estimated capital gains will be Rs 4,08,14,598, and the estimated corpus will be Rs 4,62,14,598.    

On the other hand, B will have 20 years for investment.

Their total investment will be Rs 36,00,000, estimated capital gains will be Rs 1,01,97,860, and the estimated corpus will be Rs 1,37,97,860.

You can look at the massive gap less compounding can create for a late starter.

From Rs 5,50,000 one-time investment to Rs 1,85,00,000 corpus

Here, we will see how a Rs 5,50,000 lump sum investment in a mutual fund may grow stage-wise to Rs 1,85,00,000 retirement corpus if the annualised rate of return is 12 per cent. 

Corpus from Rs 5,50,000 one-time investment in 10 years

In 10 years, estimated capital gains will be Rs 11,58,217, and the estimated corpus will be Rs 17,08,217.

Corpus from Rs 5,50,000 one-time investment in 20 years

In 20 years, estimated capital gains will be Rs 47,55,461, and the estimated corpus will be Rs 53,05,461.    

Corpus from Rs 5,50,000 one-time investment in 30 years

In 30 years, estimated capital gains will be Rs 1,59,27,957, and the estimated corpus will be Rs 1,64,77,957.    

Corpus from Rs 5,50,000 one-time investment in 31 years

In 31 years, estimated capital gains will be Rs 1,79,05,312, and the estimated corpus will be Rs 1,84,55,312.    

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)