Deciding to retire early with a stable financial condition is a dream for most people. There are also those who wish to retire as soon as possible for various reasons that have been considered.
There is nothing wrong with filing for retirement early. However, it's a good idea to understand the following important things so you don't take the wrong steps in making decisions.
What do you need to know about early retirement? Check out more information in this article!
Definition of Early Retirement
Early retirement is a condition in which a person decides to go full-time or stop working before the end of the working period between the ages of 55-65 years. In other words, the existing retirement period is faster than the specified time.
Meanwhile, according to the KBBI, the word pension means someone who is no longer working because his or her term of office has been completed.
The definition of pension according to the Financial Services Authority (OJK), can be interpreted as a form of periodic payment to employees who have worked well for a certain period of time and have quit their jobs.
From these two understandings, it can be concluded that retirement is a condition in which a person stops working because he has entered an age limit or certain conditions.
Reasons for Early Retirement
Everyone has their own reasons for choosing their life path. No exception for those who have the desire to retire early. Generally, the reasons for someone to retire early are as follows.
1. Have Your Own Business
One of the most common reasons for early retirement is owning your own business. Usually, those who choose to retire for this reason because the business they are currently undergoing is experiencing significant development it requires more attention to manage it.
In addition, the income earned from their own business usually tends to be more than the monthly income of employees or workers.
2. Established Financial Condition
The next reason for early retirement is an established financial condition. This is legitimate to be used as an excuse to retire early and usually people who choose this reason to tend to have other life desires to pursue.
3. Experiencing Severe Pain
Early retirement can be done by anyone, especially for those who are seriously ill due to an incident or certain thing, including workers who have physical disabilities caused by work accidents and others.
4. Pursue Passion
Everyone has their own desire to pursue what they like or develop a passion. This can also be used as a reason for early retirement.
5. Focus on Family
For some people, working is quite time-consuming together with loved ones, namely family. Not a few people apply for early retirement in order to devote more attention to their families. Whether it's to care for parents or focus on educating children.
6. Not Compatible With Co-workers or Bosses
Another reason for early retirement that is often put forward is incompatibility with colleagues or superiors. The existence of this incompatibility for some people is considered quite detrimental and can interfere with existing productivity. Therefore, to avoid it, it is done by retiring early.
Early Retirement Preparation
Before you decide to retire early, you should prepare yourself first. So, what are the preparations you need to do? Check out the description below.
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1. Preparing for Living Costs
The first thing you should do before deciding to retire early is to prepare for living expenses. You can calculate the existing cost of living from your current monthly costs.
The costs calculated must include the cost of food, transportation, clothing costs, lifestyle costs, and unexpected needs.
2. Determine the Source of Income After Retirement
Choosing to retire early doesn't mean your monthly income has to stop. Therefore, make sure to think carefully about your source of income after retirement.
Don't let the savings you have run out just for daily expenses after entering early retirement.
Some sources of income after retirement can come from passive income, the business you have, up to severance pay, or pension money from where you work.
3. Create a Children's Education Fund Budget
Funding for children's education is one of the crucial things that you should not overlook. Because the more children grow up, the more needs are certainly more and more. This includes children's education funds.
Therefore, before you make up your mind to choose early retirement, make sure you also think about your child's education fund budget so that the future of your baby can be guaranteed and does not add to other burdens.
4. Start Saving Retirement Funds Early
Everything will be easier if we prepare early. So, so that you don't feel restless when you are going to retire early, make sure you start saving your retirement fund as early as possible.
This is important to do even though your place of work will provide pension funds according to company or institutional policies. Because unexpected needs can arise at certain times. Therefore, you should take preventive measures.
5. Make sure to pay off all debts or installments
Before heading to early retirement, it is highly recommended to pay off any installments or debts that you have. Because, if you have not had time to do this, there is a possibility that you will be burdened to pay it off after retirement.
Do not let the quiet and peaceful early retirement according to what you dream of turn into a life full of burdens due to accumulated debt.
6. Manage severance pay as effectively as possible
Every workplace generally provides pension funds in the form of severance pay. The amount paid varies. Depends on the policies that have been set.
However, if you get it, make sure you use the funds effectively. For example, some of the severance pay you receive is used for daily needs, while the other part you can use to invest.
Terms and How to Apply for Early Retirement
Early retirement requirements vary by company or workplace. It depends on the policies in force at the place.
However, in practice, employees or workers who are allowed to apply for early retirement generally have served between 10-25 years in the same company. This is one of the conditions if the employee wants to withdraw his pension rights.
To clarify for you the requirements and how to apply for early retirement, see the following description.
Early Retirement Terms
1. Have a working period of 10 - 25 years in the same workplace or according to company policy
2. The application for early retirement has been approved by the management
How to Apply for Early Retirement
1. Submit a letter of application to the management
2. Attach the required documents such as a certificate of marital status or another status, a marriage certificate (especially for those who are married), a child birth certificate (for those who already have children), a family registration certificate, and a 3X4 photo
3. Waiting for the management's decision for the next stage
How to Calculate Early Retirement
Early retirement calculation is a way that you can do to manage your finances during retirement. This includes daily living expenses, savings, children's education funds, and other necessities.
Early Retirement Calculation Formula:
Cost of Living Per Month X Number of Months in One Year X Difference Between Current Age and Life Expectancy
For example, every month you need a living cost of Rp. 4 million. You start retiring early at the age of 47 years. Finally, the life expectancy of Indonesians is generally 80 years.
So, the details of the calculation are as follows:
IDR 4,000,000 X 12 Months X 33 Years = IDR 1,584,000,000
From the results of the calculation of the early retirement funds, we can conclude that the provision of life that you should prepare for your retirement needs for the next 33 years is IDR 1.7 billion.
Business Idea After Retirement
Planning to retire early and start your own business? The following 11 business ideas after retirement can be used as a reference!
1. Franchise Business
Franchise business is one type of business that many young people do. We can easily find this business in minimarkets, shopping centers, or other strategic areas such as highways or hawker centers.
Generally, franchise businesses focus on selling food or beverages (f & b). Several types of franchises that are currently being loved are crispy tofu businesses, boba or tea drinks, ice cream businesses, and others.
2. Food stalls
Food stalls can be an ideal early retirement business idea for you to try. Because this one business you can start from home!
So, you can still do various activities at home along with starting a basic food stall business that you have.
Some of the most sought-after types of household needs are rice, eggs, cooking oil, sugar, tea, coffee, and so on. You can also provide snacks that are in great demand, such as various chips.
3. Laundry Business
The laundry business is one of the small-scale early retirement business ideas with a lucrative monthly turnover. This business is very suitable for strategic areas that are busy with students and office workers. In addition to laundry clothes, you can also try a shoe laundry business.
4. Boarding or Renting Business
For those of you who plan to go full-time as early as possible, this type of business is very, very tempting to try. Moreover, if your boarding house or rented location is in a strategic area.
This type of business is included in passive income, where you don't have to bother to take care of it every day and can continue to enjoy the results every month.
5. Credit Counter Business
Interested in opening a business in your home or a business that can be done from anywhere for early retirement? Credit counter business can be an option! This type of business is very flexible and can be started with any capital.
6. Freight Forwarding Business
The existence of a current trend in the form of buying and selling online makes this business grow. Well, you can be part of a leading expedition to do business partners. The trick is to ask the customer service department regarding the opening of a franchise for the expedition you choose.
7. Online Business
Don't want to bother renting a place of business and have flexible working hours? An online business can be an alternative of your choice!
This business can be run from anywhere. Some online businesses that are on the rise include the skincare business, selling clothes, electronic equipment, to daily necessities.
8. Cafe business
The cafe business, whether small or large, remains one of the businesses that are never empty of enthusiasts. To start this business, you can first determine the target market, then determine the location and sales strategy.
9. Photocopy Business
Photocopying business is one type of business that is sought after by school children, students, and office workers. To run this business, you can recruit other workers or manage it personally.
10. Ranch or Plantation
For those of you who live in rural areas, the following business ideas after early retirement are worth trying! Some business ideas that you can start include the laying hens business, catfish farming business, and tilapia cultivation.
11. Vehicle Rental Business
A vehicle rental business can be a promising business idea, especially if you live in a tourist area. One form of business that you can run is a car travel business.
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Sobat BFI, that's information about early retirement. Whatever the reason, make sure you have prepared everything carefully before making up your mind to apply for retirement. Don't be careless which can actually harm you in the future.
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