Hello Sir
I am 46 years age working in central govt my current salary is 88k in hand with nps corpus of 30 lacs .i have wasted about 15 years of job period in which my only investment was lic of amount 8 lacs which will mature on 2027.
I have married lately in my 40s and now i have 3 years old son.i have tried to become disciplined now and in these 2020 to till date purchased gold ornaments of Rs 25 lacs.
Sir i have a question whether i should go for UPS or stay in NPS and i have no other investments.
I live in my ancestral house with my family.
Please suggest.
Ans: You’ve shown real commitment by becoming disciplined in recent years.
Let’s now create a 360-degree plan to secure your financial future.
Your Current Financial Profile
Age: 46 years
Employment: Central Government
Monthly in-hand salary: Rs. 88,000
NPS corpus: Rs. 30 lakhs
LIC investment: Rs. 8 lakhs (matures in 2027)
Gold bought from 2020 till now: Rs. 25 lakhs
Owns ancestral home; no housing rent or EMI burden
Married late; has 3-year-old son
No other investments currently
You have built a strong NPS corpus.
You also have gold and an LIC policy.
But your asset allocation is unbalanced.
It needs more diversification for stability and growth.
Understanding NPS and the New UPS Option
Government employees now have the choice to move from NPS to UPS.
This switch is optional and available for a limited time.
Let’s compare them carefully before any decision.
NPS – National Pension System
Pension is based on market performance
No assured income in retirement
Allows investment choice in equity and debt
Gives tax benefits under multiple sections
Offers flexibility but comes with market risk
NPS is good for growth but lacks guaranteed pension.
Returns depend on fund performance.
Pension amount at retirement is not fixed.
You will need to buy annuity at the end.
But annuity returns are generally low.
Also, annuity income is taxable.
UPS – Unified Pension Scheme (New Option)
Offers guaranteed pension after retirement
Pension amount is fixed at 50% of average last salary
Needs at least 25 years of service
Government will contribute more than under NPS
Gives peace of mind with predictable income
UPS gives financial stability in retirement.
It is not linked to market returns.
But you lose the flexibility and market growth of NPS.
You also don’t have control over your retirement corpus.
It may fall short of inflation-adjusted needs.
Which is Better for You?
You are 46 now.
So, you may have already completed more than 20 years of service.
If your qualifying service is 25 years, you can choose UPS.
Choose UPS if:
You want assured income in retirement
You are uncomfortable with market risks
You don’t want to manage investments post-retirement
Stay with NPS if:
You want growth potential with flexibility
You are okay with variable pension income
You are willing to plan annuity and withdrawals
Since you are already in NPS with Rs. 30 lakh corpus,
you should weigh the impact of switching carefully.
You can’t reverse it once opted.
Compare estimated pension under UPS
with possible pension from NPS corpus.
About the LIC Policy
You mentioned LIC worth Rs. 8 lakhs maturing in 2027.
You didn’t specify if it is term or endowment.
If it is an endowment plan, returns will be very low.
Consider surrendering the policy post-maturity.
Reinvest the maturity amount into mutual funds
through a Certified Financial Planner and MFD.
Avoid mixing insurance and investment.
Over-Exposure to Gold: A Concern
You’ve accumulated Rs. 25 lakhs worth of gold.
That’s a very high allocation to a single asset.
Gold does not give regular income.
It doesn’t beat inflation in the long term.
Also, jewellery has making charges and low resale value.
Liquidity is also limited compared to financial assets.
You may retain some portion as family reserve.
But avoid fresh investment in gold.
Avoid considering gold as your core long-term asset.
Create an Emergency Fund
You have a dependent child and only one income.
Maintain an emergency fund of 6 months’ expenses.
Keep it in a liquid fund or savings account.
This will help during medical or job emergencies.
Plan for Child’s Education
Your son is only 3 years old.
You have 15 years before his higher education.
Start a SIP now for his future.
Use a diversified mutual fund with long-term potential.
As he grows, reduce equity exposure gradually.
Create a dedicated portfolio only for education.
Don’t mix it with other goals.
Start SIP in Mutual Funds for Growth
Mutual funds offer good diversification and professional management.
Avoid direct funds, especially if you lack expertise.
Regular funds with support of CFP and MFD
offer hand-holding, periodic review, and behavioural support.
Direct funds lack personal guidance.
You may end up choosing unsuitable schemes.
Investing through an MFD with CFP credential
brings strategy, discipline, and peace of mind.
Avoid index funds.
They just follow the market blindly.
They don’t protect during market fall.
Actively managed mutual funds are better.
They aim for alpha returns and are guided by research.
Retirement Planning Must Start Now
You have only around 14 years left before retirement.
Depending only on UPS/NPS will not be enough.
You need an additional retirement corpus
to handle inflation and rising medical costs.
Start a separate SIP only for retirement.
This will help supplement your pension.
If you retire at 60 and live till 85,
your retirement will last 25 years.
Plan well in advance to avoid dependence later.
Do a Monthly Budgeting Exercise
Your current in-hand salary is Rs. 88,000.
You can still start small SIPs with Rs. 5,000 to Rs. 10,000.
Track expenses.
Avoid unnecessary purchases.
Gold buying can be stopped.
Assign money towards education, retirement, and emergency fund.
Check for Existing Insurance
Check if you have life cover.
If not, take a pure term insurance plan.
This will secure your son’s future.
Also take family health insurance.
Medical bills can wipe out savings.
Do Not Depend on Physical Assets Only
Gold is not income-producing.
House is for living, not for income.
You need financial assets for retirement cash flows.
Create a financial asset base now
through mutual funds and NPS.
Final Insights
You have taken a step in the right direction.
Your gold assets and NPS corpus give a base.
But you need to balance and grow wisely.
Don’t depend only on government pension.
Start SIPs for retirement and child’s future.
Don’t lock money in low-return products.
Seek professional support for fund selection and goal tracking.
Make every rupee count from now on.
That’s how you can create financial freedom in retirement.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Palani on Feb 10, 2024English
