Freedom to retire early a top priority, shows a BL Portfolio Survey

True freedom is being financially independent too, many would agree. After all, money is key to our everyday lives and a state of financial readiness at all times brings peace of mind.

“What does financial freedom mean to you?”, “What are you doing to reach this goal?” and “What roadblocks do you see on the path to independence?”, were some of the questions we asked, in a survey conducted online during August 10-11 (Tuesday and Wednesday), 2021.

The poll was promoted through the BusinessLine website and social media, drawing 317 responses from the young, the middle-aged and the old as well as the salaried, the self-employed and the retired.

Respondents were asked five questions and multiple responses were allowed for each query. Here’s what we got to know:

Early retirement, no debts, is freedom

Cutting across all age groups, the overwhelming answer to what one considers financial freedom is — being able to retire early; 61.2 per cent of the respondents have chosen this path as one of their answers. Two in every three salaried persons want to hang up their boots ahead of time, while one in every two self-employed persons is looking to do the same.

In today’s scenario, high income levels on the one hand, and long work hours, stress and burnout on the other, are common. These may be the driving factors for the desire to retire early.

The women and the retired persons who took the survey, though, are looking at life and money differently.

While 16 out of 39 women do want to retire early, real financial freedom to them is being debt-free; 72 per cent of the women consider being debt-free as financial freedom vs only 56 per cent of the men. 73 per cent of the retired give top priority to not being indebted to anyone, and it makes sense too. One should ideally wind up all debts while drawing close to retirement.

Read also: 4 personalities share their journey on the path to financial freedom

Spending on a good life is freedom

Yes, the young want to retire early. But they have a long runway to even an early retirement and it helps them nurse bold aspirations for a good life alongside — 85 per cent of folks wanting a dream house in a dream location, 73 per cent of the people wanting to travel the world, and 75 per cent among those who would like to pursue a career they like, are in the 20-40 age group.

Looking at this statistic more granularly, 40-45 per cent of the young salaried and self-employed people as well as the male respondents equate choosing a career path they like — even if it is an unconventional one —with financial freedom. The boredom of 9-to-5 jobs done mechanically seems to be a real burden these people carry on their shoulders. Women are from Venus and so they see the world through another lens. To them, financial freedom to travel the world takes priority over a dream house or a dream job.

To achieve their lofty ambitions, the young are ready to take higher risks on their investments, for higher returns. 70 per cent of those who have chosen investing in stocks, mutual funds and gold as one of the things they are doing to achieve the freedom they desire are in the 20-40 age group.

Saving more is freedom

Desire for early retirement and the urge to enjoy the good things in life are turning men and the salaried class into big savers, reveals the survey. While they are willing to take risk to earn higher returns, they also understand that a penny saved could be a penny earned. Across all age groups, more men than women and more salaried than self-employed are monitoring their expenses and cutting down on unnecessary ones, are increasing savings as their earnings go up and are also living within their means, all towards achieving the freedom they are yearning for.

As far as women go, only those in the 40-60 age group fare better than men in some areas, such as living within their means and increasing savings as earnings move up. Women, surprisingly, lag men when it comes to monitoring and pruning expenses across all age groups.

Inadequacy, a shackle

Each has his/her unique way to reach their destination. But the path to financial moksha is not without thorns. The respondents are getting it all right — they wish to retire early, want to live a good life and are saving and investing in the right ways to achieve these goals. But there could be slips. Chief among the worries is the fact that they did not start saving early enough — If youth knew, if age could! An equally important worry is that many are unsure of how much they need for retirement. Setting up a sufficient retirement corpus is a function of what your monthly expenses would be in your silver years, adjusted for inflation, as well as your life expectancy.

Parking this corpus in the right instruments post-retirement to achieve a regular stream of income is also key.

These two concerns raised by respondents drive home the need for financial literacy early in one’s working life as well as the need for taking professional help to manage one’s finances, if necessary.

Only then you will truly be financially independent. Rightly so, many respondents plan to do this.

Survey Highlights

* Freedom to two in every three salaried persons is, hanging up their boots ahead of time

* One in every two self-employed persons is looking call it a day, early

* For women and the retired, real financial freedom is being debt-free

* 38 % of respondents equate financial nirvana with doing the work they like

* 75-85 % of folks with aspirations of a dream house or desire to see the world are in the 20-40 age group

* 70 % of those investing in stocks mutual funds and gold to reach their goals are in their 20s or 30s

* Men, salaried class fare better in cutting down expenses, increasing savings and living within their means, on the path to freedom

* Leverage is not a shackle, with only 15 % having big loans and 27 % aiming to pre-pay when possible

* A late start to investing and lack of clarity on the retirement corpus are key hurdles to achieving the independence desired

* 58 per cent of the respondents want to improve their knowledge of financial products or take professional advice, to make amends

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