i am 55yrs old commerce graduate with 35 years experience working with pvt ltd company here with CTC of 15L. now my company is offering VRS and proposed to appoint me as retainer offer of 8.82L. what should i do.

Ans: ITR 2.

Please take your CAs advice before moving ahead.

Ans: Hello Mr.Sharma

May I suggest following.

1.As rightly some by you, kindly talk to your family, they are the best to guide you.

2. If your financial situation is good enough then you may want to take VRS. However please do calculation of amount you will get from VRS and the responsibilities that you have to discharge: kids education, kids marriage and your retirement needs.

Tution is a safe bet, but it might take you time to generate enough to take care of your expenses.

So at this point I would suggest do financial calculation, you may seek help of trusted financial advisor. Basis that you can take your call.

All the best

Ans: Deciding to take voluntary retirement (VRS) is a significant life decision, and it’s important to weigh the pros and cons carefully, especially considering your family’s current situation and your long-term goals. Since you plan to invest in farmland and a village school, assess whether your earnings from VRS, along with any savings, are sufficient to support your retirement, these projects, and any other future expenses. Make sure to account for unforeseen costs. Although your husband is still working and your daughter is financially independent, your son may require financial support until he is established. Ensure that your financial plans allow for his needs while maintaining your own security. Farming can be a fulfilling but challenging venture. If your plan is to generate income from farming, research the agricultural sector thoroughly. Consider potential returns, climate risks, and market conditions. If you are financially secure and passionate about your projects, taking VRS could be a fulfilling choice. However, make sure that you have a solid plan for your financial stability, your son’s future, and the long-term sustainability of your farming and school projects.

Ans: Taking Voluntary Retirement Scheme (VRS) is a significant decision. It requires evaluating your financial readiness and future sustainability. Below is a detailed assessment and plan for your financial situation.

Current Financial Position

Monthly income: Rs. 1.4 lakh from government service.

Home loan outstanding: Rs. 20 lakhs.

Sellable land value: Rs. 15 lakhs.

PPF balance: Rs. 9 lakhs.

Post Office Term Deposit: Rs. 10 lakhs.

Provident Fund (PF): Rs. 21 lakhs.

Cash savings: Rs. 34 lakhs.

Estimated VRS benefit: Rs. 60 lakhs.

Pension after VRS: Rs. 50,000 per month.

Monthly expenses after VRS: Rs. 25,000.

Positive Financial Factors

Your monthly pension exceeds your current expenses. This creates a surplus of Rs. 25,000 monthly.

You have Rs. 34 lakhs in cash and will receive Rs. 60 lakhs from VRS.

Your PPF and PF balances provide long-term financial security.

Sellable land worth Rs. 15 lakhs adds to your asset base.

You have manageable liabilities with a home loan of Rs. 20 lakhs.

Debt Management

Consider using part of your cash or VRS proceeds to reduce the home loan.

Clearing the home loan will eliminate a recurring liability, improving monthly cash flow.

Avoid full repayment if the interest rate is low. Invest surplus funds for better returns.

Retirement Corpus Planning

Your existing investments and cash total around Rs. 1.49 crore (excluding land).

Assuming moderate returns, this corpus can provide additional financial security.

Continue contributing to PPF for tax-free long-term returns.

Education Fund for Your Daughter

Allocate funds from your VRS proceeds for your daughter's education.

Consider a mix of recurring deposits and mutual funds for medium-term growth.

Actively managed equity mutual funds can outperform inflation over time.

Investment Strategy Post-VRS

Emergency Fund:

Keep at least 12 months of expenses (Rs. 3 lakhs) in a liquid fund.

This ensures liquidity for unforeseen situations.

Debt Mutual Funds:

Allocate a portion of your corpus to debt mutual funds for steady growth.

These funds provide regular income with lower risk.

Equity Mutual Funds:

Invest 40-50% of your corpus in equity mutual funds for long-term growth.

Avoid index funds; actively managed funds offer better performance.

Consult a Certified Financial Planner for fund selection.

Post Office and Fixed Deposits:

Retain some funds in fixed deposits for risk-free returns.

Post Office schemes are suitable for conservative investors.

Tax Planning Post-VRS

Pension income will be taxable as per your tax slab.

Consider using Section 80C benefits through PPF and ELSS investments.

Equity mutual funds have favourable tax treatment for long-term capital gains.

Debt mutual funds’ returns will be taxed as per your slab.

Invest in tax-efficient products to minimise liability.

Insurance Review

Ensure you have adequate health insurance coverage for yourself and your family.

Check if your current policy from your employer continues post-retirement.

Consider a term insurance policy if needed to secure your family’s future.

Future Expense Management

Your current monthly expense is Rs. 25,000. This is manageable with your pension.

Account for inflation in long-term expense planning.

Use your investment returns to cover increased costs in future years.

Selling the Land

Selling the land worth Rs. 15 lakhs can provide additional liquidity.

Reinvest this amount into diversified mutual funds for better growth.

Consult a Certified Financial Planner before selling to ensure timing and reinvestment strategies.

Additional Income Opportunities

Explore part-time or consultancy work post-VRS to supplement income.

This keeps you engaged while generating extra earnings.

Final Insights

Based on your current financial standing, VRS is a viable option.

With your pension and corpus, you can maintain a comfortable lifestyle.

Strategic investments will ensure long-term financial security.

Consult a Certified Financial Planner to refine your investment plan.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment