I am 52 years old.Having 60 lakhs in ppf, 55 lakhs in pf,investment value thru sips in various MF is now around 80 Lakhs, FDs worth 75 lakhs.Currently ongoing sips are appr 2.5 Lakhs a month.Residing in own home with my family .No major liability as such.Have taken mediclaim cover for self and wife worth 20 lakhs and annual premium of 40K is paid to National insurance.In 2011 i purchased Jeevan Sarak LIC and pay annualy 1 lakh premium which i have to pay till 2038.In 2020 during covid self invested 40 Lakhs in KVP of Post office and will mature in 2030 .In mid of 2020 i bought Jeevan Shanti pension policy and paid Rs 12.5 lakhs forr my policy and also another Rs12.5 Lakhs for my wife .Pensions will start at 2030 and app 31k /month we will receive pensions till we survive and post that invested amount will go to our son .I invested in new flat and comnercial office and will get posesion in Jan 2025.So expecting to fetch a rent from these 2 properties around 60K /month.If i take early retirement ie in Jan 2028 then will it be safe to do so ? I need to ensure to generate 2.75 Lakhs /month from 2028 so pl advise and guide suitably .Thanking you, With Regards.
Ans: Assessing Your Financial Position
You have built a strong financial base. Let's evaluate your assets:
PPF: Rs. 60 lakhs
PF: Rs. 55 lakhs
Mutual Funds: Rs. 80 lakhs
FDs: Rs. 75 lakhs
KVP: Rs. 40 lakhs (matures in 2030)
Jeevan Sarak LIC: Annual premium of Rs. 1 lakh till 2038
Jeevan Shanti Pension Policy: Rs. 31,000/month from 2030
Properties: Expected rent of Rs. 60,000/month from Jan 2025
Ongoing SIPs: Rs. 2.5 lakhs/month
Monthly Income and Expenses Post-Retirement
You aim to generate Rs. 2.75 lakhs per month post-retirement from Jan 2028. Let's explore how to achieve this.
Rental Income
Properties: Expected rent is Rs. 60,000/month starting from Jan 2025.
Pension Income
Jeevan Shanti: Rs. 31,000/month from 2030.
Interest and Dividends
FD Interest: Assuming a 6% return on Rs. 75 lakhs, you will earn Rs. 4.5 lakhs per year or Rs. 37,500/month.
PPF and PF: Withdrawals from these can provide additional income, considering their tax-free nature.
Systematic Withdrawal Plan (SWP) from Mutual Funds
You can use SWP from your mutual fund corpus. Assuming a 6% annual return, you can withdraw Rs. 40,000/month while preserving capital.
Investment Strategy
Asset Allocation
Diversify: Maintain a balanced mix of equity, debt, and fixed-income instruments.
Equity Exposure: Continue SIPs in equity mutual funds for growth and inflation protection.
Debt Investments: Use FDs, PPF, and PF for stable, risk-free returns.
Insurance and Health Cover
Mediclaim: Ensure sufficient coverage for unforeseen medical expenses.
Term Plan: Adequate life cover is essential to secure your family's future.
Re-evaluate LIC Policies
Jeevan Sarak: Evaluate the returns of this policy. If it underperforms, consider surrendering and reinvesting in higher-yielding instruments.
Tax Efficiency
Tax-Free Instruments: Maximise contributions to PPF and other tax-free instruments.
Capital Gains: Use long-term capital gains exemptions judiciously.
Retirement Withdrawals: Plan withdrawals from retirement accounts to minimise tax impact.
Creating a Withdrawal Strategy
Staggered Withdrawals: Plan systematic withdrawals from mutual funds and other investments to maintain liquidity.
Emergency Fund: Keep a fund equivalent to 6-12 months of expenses to handle unforeseen situations.
Regular Review and Adjustment
Annual Review: Reassess your portfolio annually with a certified financial planner.
Market Conditions: Adjust investments based on changing market conditions and life goals.
Final Insights
To achieve a comfortable retirement in 2028, you need a diversified, well-planned investment strategy. Focus on maintaining a balance between growth and safety, and regularly review your financial plan to stay on track.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in