If you have not amassed a decent sum for your retirement, you are not alone. Join the club of working professionals who want to retire early but have not been able to amass the amount. Most individuals are not aware of the investment products and have no idea how to go about it.

If you have been procrastinating on investments, you might end up regretting your decision at a later stage. It is advisable to start early, especially in your twenties if you want to retire rich by 45. However, if you have not started yet, you can do it now. Better late than never. Here are simple ways you can plan your investment in order to retire rich by 45.

1. Save A Part of Your Income for Retirement

The first and foremost step is to save a certain amount of your income for the purpose of your retirement. This could be 5% of the income, 10% of the income or even more. It depends on your monthly income and your monthly expenses. However, it is essential to cut down on a few expenses and to save for the future. Ideally, one should save about 10% of their monthly income. If you are covered by the provident fund account, you are already setting aside money for your retirement, and you cannot avoid it. Keeping the power of compounding in mind, even a small amount of EPF contribution will reap higher returns.

2. Align the Investments with Your Income

Whatever investment product you choose, you need to align it with your income. This means if the income increase, you should increase the investment amount. If your income has increased by 10%, you need to increase the investment by at least 4% to 5%. If you do not do this, it will undermine your retirement planning.

3. Choose the Right Investment Products

When you start saving for retirement, you are young and employed. You have a higher ability to bear risk which means you can choose investment products that are high on risk and guarantee higher returns. You should weigh the options available for you and choose to invest in the ones that fit your needs. Considering goal-based retirement planning, you could opt for mutual funds at an initial stage and then move into debt products as you age. You can also divide the investment amount into different investment products so that your corpus grows appropriately. Putting all the funds into one investment product is not a very good idea.

4. Do Not Touch the Corpus

You might be tempted to dip into the corpus every time you need immediate funds but do not touch it until you retire. You have a purpose for investment, and the corpus should not be used until the time comes. If you dip in the corpus for every basic need, you will never be able to generate enough for your retirement. Always consider the power of compounding and the impact it will have on the corpus if you withdraw it before time.

5. Pay Off the Debts

You do not want to retire early with a pile of debt on you. It is best to pay off every liability when you retire so that you can enjoy your retirement stress-free. Whatever age you may retire at, you need to ensure that the debts have been paid off. If you have any loans or borrowings to pay off, you need to do that right away. Set up a sustainable repayment plan and stick to it. The earlier you pay off the debt, the better it is for you. You will be able to save more and invest more.

Conclusion:

These simple steps will set you on the right path towards retiring rich by the age of 45. Invest in products that align with your risk appetite and are ideal for your portfolio. You need to ensure that you are saving much more than your current annual expenses as inflation is going to increase the cost of living by the time you retire. If you start early and remain consistent, you will be able to achieve your retirement goals at the right age.