Freedom at 45! How 21-year-old Gen Z can retire early
Why retire at 45?
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Unlike traditional retirement, which often starts at 60, financial freedom at 45 means that you no longer have to work to earn money. You can continue working - but only if you want. The idea is to reach a point where money no longer controls your choice.
Let's break it down.
Suppose you spend INR 50,000 per month today. With 6% average inflation, you will need approx INR 2.02 lakh/month at the age of 45 to maintain the same lifestyle - which is about INR 24.3 lakh/year. To maintain this income for next 35 years post-retirement (up to 80 years of age), you will need a retirement corpus of about INR 4.01 crore, assuming 5% post tax return on your corpus.
What is the plan?
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To accumulate INR 4.01 crore in the next 24 years, you will need to invest around INR 24,221 per month through SIP (Systematic Investment Plan). This may look like a large commitment, but if you start early and remain consistent, assuming 12% annualised returns through market-linked instruments, this goal is very much achievable.
Smart investment strategy
Here is how to make a strong investment portfolio which should be well diversified across:
Large-Cap Mutual Fund: Offer Stability and consistent Returns
Mid and Small-Cap Fund: Help increase your money rapidly in the long term
Beta Fund: Capture extensive market movements with more flexibility
ETF (Exchange-Traded Funds): Low cost, passive investment that tracks the indexes
Gold ETF or Sovereign Gold Bond: Protect your wealth against inflation
International Mutual Funds: Add global diversification (if aligned with your risk profile)
What to Do As You Get Closer to 45
As you are near retirement, your focus should move from growth to protection. Gradually transition towards debt instruments, high-duration funds, bonds, and income-generating options to reduce volatility and ensure stable income. Consider:
Debt mutual funds or long-duration bonds
Fixed-income products like FDs or government bonds
Systematic Withdrawal Plans (SWPs): Get monthly income from your investments
Annuities: Provide guaranteed income after retirement
Don't "Set It and Forget It"
Your portfolio needs regular attention. It must be monitored regularly and rebalanced periodically to align with changing macroeconomic fundamentals such as inflation, interest rate cycle, global equity trends, and geopolitical risks.
Markets are dynamic, and so are your financial needs; reviewing your portfolio helps you identify underperforming assets, adjust asset allocation, and capitalize on new opportunities, ensuring optimal risk-adjusted returns throughout your financial journey. Regular review will keep you on track toward long-term stability and wealth creation.
Discipline Is the Key
Here's the formula in five simple steps:
Start early — the sooner, the better
Be consistent — invest every month, no matter what
Diversify — spread your investments across different assets class
Review regularly — adjust your plan as needed
Stay invested long-term — let compounding work its magic
Final Thoughts
You don't need to come from money or earn a huge salary to retire early. What you really need is a clear goal, a simple plan, and the discipline to follow through.
For Gen Z, time is the biggest asset. If you start at 21, invest smartly, and stay committed — retiring at 45 isn't a fantasy. It's a realistic goal.
So, is financial freedom at 45 possible? Absolutely. All it takes is clarity, consistency, and a little confidence in your future self.
(The author is Group CEO & CIO – Wise Finserv Private Wealth)
(
Disclaimer
: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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