Dear Sir
I am now 60 yrs and retiring next month. By god's grace I have no EMI, Loan and any liability. My present expenses is around 200,000 Rs/month.
I have EPF of 85 lacs, PPF of 17 lacs, FD in Bank of 2 Cr and MFs of 85 Lac so far. I will get 3000 INR as Pension per month. I wish to understand if all this is sufficient corpus down the line for 10 yrs. Please advice how one can manage in this much for a couple.
Ans: You are entering retirement with zero loans, a high monthly budget, and a solid asset base. That is a great position. You now need a very simple, tax-efficient, and low-stress plan to manage this wealth for the next 10 years and beyond.
Let us break this into key sections to plan from every angle.
Your Financial Snapshot at Retirement
You are retiring next month at age 60.
You have no liabilities, which is excellent.
Your monthly household expense is around Rs. 2 lakh.
You have Rs. 85 lakh in EPF, which will now be withdrawn.
You have Rs. 17 lakh in PPF, which is maturing soon or can be extended.
You have Rs. 2 crore in bank fixed deposits already.
You also have Rs. 85 lakh in mutual funds.
Your monthly pension is Rs. 3,000, which is too small to count.
Retirement Corpus Total and Its Strength
Your combined corpus today is about Rs. 3.87 crore.
At 2 lakh monthly expense, your annual expense is Rs. 24 lakh.
You need Rs. 2.4 crore just to cover 10 years without interest.
But your funds will earn income also.
So your present corpus is strong enough for 10 years and more.
With proper planning, this can last 20 years or more.
Expected Inflation and Expense Growth
Inflation is likely to be 6% to 7% yearly on average.
So your Rs. 2 lakh monthly expense may rise to Rs. 3.5 lakh in 10 years.
Your plan should therefore give both income now and growth later.
Your Goals in Retirement
Have monthly income of Rs. 2 lakh that grows over time.
Keep taxes as low as possible.
Maintain full liquidity for any medical or family needs.
Grow part of the corpus for long-term safety.
Leave behind wealth for your spouse or children, if possible.
Problems to Avoid in Retirement
Do not put all money in FDs. Inflation will eat the value.
Do not depend only on interest. It will not grow with expenses.
Do not keep too much in savings accounts. Returns are too low.
Do not chase direct stocks or risky options. You are not working anymore.
Asset Allocation for Next 10 Years
Divide the Rs. 3.87 crore into 3 buckets.
Bucket 1: Income Bucket – For first 5 years of income
This should be around Rs. 1.25 crore.
Use this for immediate monthly income and any emergency needs.
Keep it in laddered fixed deposits (of 1-5 years) and bank RDs.
Also use ultra-short duration debt mutual funds through MFD with CFP support.
Ensure liquidity and steady income.
Bucket 2: Growth + Safety Bucket – For years 6 to 10
Allocate around Rs. 1.25 crore here.
Invest in hybrid mutual funds and short-term debt funds.
Rebalance every 2 years with help of a CFP.
This gives balance of safety and slow growth.
Bucket 3: Long-Term Growth Bucket – For after 10 years
Keep the remaining Rs. 1.37 crore here.
Invest in actively managed mutual funds only, not index funds.
Choose multi-cap, large-cap, and flexi-cap categories.
Do not choose direct mutual funds yourself.
Invest through MFD linked with a Certified Financial Planner.
This will grow money for medical costs, spouse’s future, or legacy.
Your Monthly Income Strategy
From Bucket 1, start a monthly SWP (systematic withdrawal plan) from debt funds.
You can also break small FDs monthly or quarterly to support income.
Refill Bucket 1 every 3 years by transferring from Bucket 2.
From age 70 onward, draw from Bucket 3 if needed.
Always keep 6 months’ expenses in bank savings for liquidity.
Cash Flow and Tax Management
FD interest is taxable at slab rate. So spread FDs between yourself and spouse.
Use debt mutual funds for lower taxes with STCG at 20% and LTCG as per slab.
Mutual funds are more tax-efficient than FDs over time.
Withdraw smartly using SWP to stay within low tax slabs.
You can also use PPF extension with contribution for 5 more years.
That gives tax-free growth and safety.
Emergency Medical Planning
Keep Rs. 15–20 lakh in a separate liquid FD or debt fund for medical use.
This is your health buffer. Do not touch it unless for emergency.
Keep this in joint name with spouse for easy access.
If your health insurance is low, buy a super top-up plan with Rs. 25 lakh or more.
Managing PPF and EPF Corpus
EPF of Rs. 85 lakh can be withdrawn tax-free.
Use part of it to build Bucket 1 and part for long-term Bucket 3.
PPF of Rs. 17 lakh is also tax-free.
You can keep it locked or extend for 5 years with or without contribution.
Use it as a tax-free part of your safety bucket.
Mutual Fund Strategy – What to Do Now
Rs. 85 lakh in mutual funds is a good base.
Do not sell it all suddenly. Use part for Bucket 2 and 3.
Review each fund with your Certified Financial Planner.
Shift from mid or small cap to more stable large/multi/flexi-cap mix.
Use only regular plans. Avoid direct funds.
Direct funds may look cheaper, but you miss support and rebalancing.
A good MFD with CFP helps you avoid wrong switches and panic.
Asset Rebalancing Every 2 Years
Every 2–3 years, revisit your asset buckets.
Move money from growth bucket to income bucket when needed.
Use SWP, FD breaks, and PPF maturity to refill buckets.
This keeps your income smooth and your capital growing.
Legacy and Estate Planning
Create a simple Will. It avoids confusion later.
Nominate spouse or children in all investments.
Keep a record of assets, passwords, and bank details.
Talk to your family and explain the system you have set.
Keep one person trusted for future medical or financial help.
Expenses After 10 Years
At age 70, you may need Rs. 3.5 lakh or more per month.
By that time, Bucket 3 will start giving income.
The mutual fund growth and rebalancing will support this.
If health declines, medical spending can rise. Plan accordingly.
If any lump sum is required, break long-term FDs or redeem mutual funds.
What You Should Not Do
Do not buy new insurance or annuities. You don’t need them.
Do not go for index funds. They do not protect well in falling markets.
Actively managed funds perform better with a proper planner.
Do not invest in stocks or risky bonds for extra returns.
Do not take advice from unqualified persons or relatives.
Do not keep too much idle money in savings accounts.
Use a Certified Financial Planner to Monitor
A CFP will track your income plan, tax impact, and medical reserve.
Your needs will change over 10 years. Rebalancing is a must.
Without planning, even a big corpus can shrink due to wrong choices.
With proper strategy, your corpus can last for 20+ years with growth.
Investment Monitoring Checklist
Review all FDs every year. Renew or restructure as per needs.
Check mutual fund portfolio every 6 months with MFD.
Track income, expense, and surplus monthly.
Record all redemptions and tax impact.
Make your spouse aware of all decisions.
Other Important Tips
Keep a small part in gold only if needed for future gifting.
Avoid new real estate for investment. It reduces liquidity.
Use mobile apps only for checking balances, not for investing.
Always double check SMS and emails from banks or mutual funds.
Maintain a yearly summary sheet of all investments.
Keep one trusted CA or tax expert to help during filing.
Finally
You have built your wealth with care. You can now protect it with discipline.
Rs. 3.87 crore is enough for the next 10–15 years with smart withdrawal.
But you need structure. Divide your corpus into 3 buckets as explained.
Avoid risky new products. Stick to what you understand.
Take help from a Certified Financial Planner to do annual checks.
This will keep your income steady, taxes low, and worries away.
Plan for your spouse too. Ensure she can handle money if anything happens.
With this approach, your retirement can be peaceful and financially secure.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Raghu on Aug 17, 2024Hindi
