Hi, I am 57+ years old with 2 yrs left for retirement from pvt firm. My take home salary is 2.15L after tax, corporate insurance and VPF deduction. I have accumulated 2cr in PF, 40 L in PPF, 20 L in FD, 40 L in retiral benefits when due. SIP of monthly10k in Equity MF started recently valued at only 5L. Own house, 40k loan monthly emi ending just before retirement. Self and family sufficiently insured . Monthly expense 1.8L . Eligible for 1L pension post retirement. I need to ensure a total retirement corpus of 5 cr by next 2 yrs. Fall in Single income bracket. Pls advise.
Ans: You have already taken some key steps in the right direction. Let me guide you towards achieving your Rs 5 crore corpus goal with a structured, 360-degree plan. This advice comes with your short 2-year time frame, income flow, and existing assets in mind.
Current Financial Snapshot – Assessment
You are already on a stable base:
Age: 57+ years, 2 years from retirement.
Monthly net salary: Rs 2.15 lakh.
Existing savings:
PF: Rs 2 crore.
PPF: Rs 40 lakh.
FD: Rs 20 lakh.
Retiral benefits (due at retirement): Rs 40 lakh.
MF SIP (started recently): Rs 5 lakh value, Rs 10,000/month.
EMI of Rs 40,000 ending just before retirement.
Own house – no rent burden.
Monthly expense: Rs 1.8 lakh.
Post-retirement pension: Rs 1 lakh/month.
Well-insured family and self.
This gives a very good head-start. You are already financially disciplined. Your lifestyle is well-planned. You are consistent in saving. But the target of Rs 5 crore in 2 years is slightly tight. So, every rupee now must work harder.
Goal Feasibility – Analysis of Rs 5 Crore Target
Let’s review if this goal is realistic:
Current accumulated wealth: Rs 3.05 crore (PF + PPF + FD + MF).
Retiral benefits in 2 years: Rs 40 lakh more.
Total likely corpus in 2 years without new investments: Rs 3.45 crore.
Gap to Rs 5 crore: Rs 1.55 crore.
Your income surplus is approx. Rs 35,000 per month (Rs 2.15 lakh income – Rs 1.8 lakh expense – Rs 40,000 EMI). EMI will stop in 2 years. That will free more cashflow, but not now. With just Rs 35,000/month savings, achieving Rs 1.55 crore extra in 2 years needs very high returns. That is not advisable near retirement.
Hence, you need:
Clear cost management.
Smarter savings redirection.
Enhanced allocation in high potential assets.
Realistic goal adjustment if needed.
Action Plan – Smart Steps for Next 2 Years
Let us now break down what to do.
1. Re-align Your Monthly Budget
Current surplus is Rs 35,000/month.
Cut monthly lifestyle spend from Rs 1.8 lakh to Rs 1.5 lakh.
Free up Rs 65,000+ per month for investments.
This increase is key to reach your Rs 5 crore goal.
2. Increase Equity Exposure Strategically
You started SIP in equity MF. Good beginning.
Rs 10,000/month is very low for your goal.
Increase it to Rs 50,000/month if possible.
Invest in well-managed diversified mutual funds.
Use regular plans through a Certified Financial Planner.
Avoid direct plans. They offer no guidance or risk management.
Regular plans allow you access to a certified MFD + CFP support.
This handholding is vital at your stage.
Disadvantage of Direct Plans:
No portfolio review.
No exit strategy support.
No emotional handholding in market volatility.
You might choose wrong funds.
Saving 0.5%-1% fee is not worth big risk at this stage.
Instead, pay a small trail fee and get full guidance. That is safer and more profitable in the long run.
3. Lumpsum Allocation from FD + PPF
PPF and PF are debt-heavy.
FD returns are taxable and low.
You need growth assets now.
Action:
Move Rs 10 lakh from FD into 2 lumpsum tranches of Rs 5 lakh each.
Use them in equity mutual funds via Systematic Transfer Plan (STP).
STP gives gradual market exposure.
This protects you from sudden market crashes.
PPF: Continue till maturity. Don’t break. It's safe and tax-free.
FD: Don’t increase allocation. Use only as emergency buffer.
4. Retiral Benefits to Be Invested Wisely
Rs 40 lakh expected on retirement.
Don’t keep it in savings account or FD.
Split into 2 parts:
Rs 15 lakh into hybrid or balanced mutual funds.
Rs 25 lakh in short duration debt mutual funds for 2–4 year needs.
Use mutual funds, not bank products.
Bank products give lower return and are taxable. Mutual funds give better growth and flexibility.
5. Monthly SIP Discipline and Staggering
Increase SIP gradually each quarter if possible.
Target Rs 75,000–80,000/month within 12 months.
Use diversified equity mutual funds across large, mid and flexi-cap categories.
Avoid sector funds or thematic funds. Too risky.
Avoid index funds:
No active management.
Cannot avoid loss in falling markets.
Underperforms in sideways or volatile markets.
Lack flexibility and safety in retirement stage.
Advantage of actively managed funds:
Can shift to cash or debt when needed.
Expertly curated by experienced fund managers.
Less risk in volatile times.
This is important for your risk profile.
Post Retirement Strategy – Manage Withdrawal and Income Smartly
After retirement:
Monthly pension: Rs 1 lakh.
Your current monthly need: Rs 1.8 lakh.
Monthly gap: Rs 80,000.
So, your corpus should generate Rs 80,000/month = Rs 9.6 lakh/year.
Step-by-step plan:
Use debt and hybrid funds to generate fixed withdrawals.
Use equity fund growth for long-term needs.
Keep 1 year of expenses in ultra short-term fund.
Replenish it every 12 months from equity/debt growth.
Don’t withdraw from equity funds in loss phase.
Use buffer funds instead. This avoids selling in down markets.
Tax Impact Planning – Avoid Surprises
Equity mutual fund long term capital gain (LTCG) over Rs 1.25 lakh is taxed at 12.5%.
Short term gains (STCG) taxed at 20%.
Debt mutual funds taxed as per your slab.
Plan redemptions carefully with your CFP.
Spread out withdrawals to reduce tax burden.
Avoid fixed deposits for income. They are taxed at your slab rate.
Emergency and Contingency Plan
Keep Rs 10 lakh in liquid fund or ultra-short duration debt fund.
This is for health emergency or family needs.
Don’t touch your retirement corpus for this.
Emotional and Family Considerations
Talk to spouse and family about spending reduction for next 2 years.
Avoid lifestyle upgrades.
No unnecessary gifting or lending.
Involve family in investment discussions.
This helps them manage better later.
What Not to Do Now
Don’t invest in real estate. It lacks liquidity.
Don’t buy new insurance policies.
Don’t invest in NPS or ULIPs now.
Don’t go for annuities. Poor returns and no growth.
Don’t keep big cash in bank FDs.
Finally – Key Insights and Recommendations
Rs 5 crore goal is possible with smart moves.
Cut spending. Increase savings.
Use equity mutual funds more.
Avoid FDs and other low-yield products.
Work closely with a Certified Financial Planner.
Avoid emotional investing decisions.
Keep health insurance active always.
Build a withdrawal strategy from day one after retirement.
Revisit and re-balance portfolio every 6 months.
Protect capital. Grow smartly. Spend wisely.
Your financial discipline is already strong. With better strategy, the final stretch will be successful.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Nasser on May 29, 2024Hindi
