Hi, I am 44 yr old software professional. Following is my current financial portfolio:
1.6 CR IN BANK FD/ NBFC FD/PO FD/PO MIS/NCD/SGB/RBI BOND
40 L IN PAID UP ULIPS
30 L IN FIXED INCOME SCHEME
1 CR IN MFs (75 L INVESTED AMT)
1 CR IN SHARES (78 L INVESTED AMT)
SIP 8O K MONTHLY
1 CR APARTMENT
NO DEBT
Have Life & Medical Insurance
14 YEAR OLD SON – EDUCATION NEEDS
2 L/MONTH EXPENDITURE AFTER RETIREMENT
Based on above information, is retirement possible at 45?
Ans: You have done an excellent job in building wealth by 44. Your portfolio is diversified across deposits, bonds, mutual funds, stocks, insurance, and property. You are debt-free, with SIP discipline, and you have planned well for your family. Very few achieve this level of stability at your age. Now, let us assess retirement at 45 from a Certified Financial Planner perspective.
» Current portfolio snapshot
– Rs. 1.6 crore in bank FDs, NBFC FDs, PO deposits, MIS, NCDs, SGBs, RBI bonds.
– Rs. 40 lakh in paid-up ULIPs.
– Rs. 30 lakh in fixed income schemes.
– Rs. 1 crore in mutual funds, invested Rs. 75 lakh.
– Rs. 1 crore in shares, invested Rs. 78 lakh.
– Rs. 80,000 SIP monthly, showing strong discipline.
– Rs. 1 crore apartment, debt-free.
– Adequate life insurance and medical insurance.
– Family responsibility with 14-year-old son.
– Expected retirement expenditure: Rs. 2 lakh monthly.
Your assets today are around Rs. 5.3 crore. This is a strong number. But retirement at 45 means you need income for 40+ years. That makes assessment very critical.
» Cash flow requirement after retirement
– You expect Rs. 2 lakh monthly, Rs. 24 lakh yearly.
– With inflation, this expense will double in around 12 years.
– Retirement corpus must not just provide today’s income, but also protect against rising costs.
– So, investments must grow even during retirement.
This is where balance between growth assets and safety assets matters.
» Assessment of existing portfolio
Fixed deposits and bonds: Rs. 1.6 crore
– Gives stability but returns are low.
– Post-tax return will be around 5 to 6%.
– Not enough to beat inflation.
Paid-up ULIPs: Rs. 40 lakh
– Locked and low return.
– Better to surrender and reinvest in mutual funds.
– Insurance with investment is not efficient.
Fixed income schemes: Rs. 30 lakh
– Similar to FDs.
– Good for safety but weak growth.
Mutual funds: Rs. 1 crore
– Strong asset with growth potential.
– SIP of Rs. 80,000 will keep adding.
– If continued for long, wealth grows steadily.
Shares: Rs. 1 crore
– Direct stock portfolio is large.
– High growth possible, but risk also high.
– Managing this for 40 years may not be easy.
Apartment: Rs. 1 crore
– Provides stability, not regular cash flow.
– Good for family security, not for income.
Overall, portfolio is 60% in fixed return, 40% in equity. For early retirement, higher equity share is needed.
» Retirement at 45: challenges
– You will stop earning salary very early.
– Investment corpus has to sustain for 40 years.
– Inflation is the biggest enemy in this long horizon.
– Only equity-oriented funds can fight inflation.
– Too much money in deposits will erode value over time.
– ULIPs drag down return.
– Direct stock handling for decades requires active monitoring.
So, retiring at 45 is possible only if you shift portfolio structure.
» Role of mutual funds
Actively managed mutual funds should become your main growth engine.
– They provide diversification.
– Professional fund managers adjust strategy as economy changes.
– Regular plan investing through MFD with CFP gives ongoing advice and review.
– Direct funds look cheaper but lack support.
– Mistakes in timing, switching, or goal allocation can destroy returns.
– With regular plans, you pay small cost for proper guidance and discipline.
This helps to keep portfolio aligned for decades.
» Why not index funds or ETFs
Index funds follow index without active strategy.
– They do not protect in market falls.
– They cannot shift to sectors with higher potential.
– They deliver average returns, not superior returns.
– For a 40-year retirement, average return is dangerous.
– You need active management to stay ahead of inflation.
So, index funds are not suitable here. Stick to actively managed funds.
» Taxation impact on withdrawals
– When you sell equity mutual funds, LTCG above Rs. 1.25 lakh taxed at 12.5%.
– STCG taxed at 20%.
– Debt mutual fund gains taxed as per your slab.
– FDs and bonds also taxed at slab rate.
So, designing systematic withdrawals matters. You need mix of equity and debt to reduce yearly tax.
» Education goal for son
Your son is 14. In 4 years, higher education costs will begin.
– Allocate a separate fund for education.
– Do not mix retirement corpus with education goal.
– Withdraw from FDs or bonds for education, not from equity funds.
– This avoids disturbing growth portfolio.
» Suggested portfolio rebalancing
– Surrender paid-up ULIPs and move to mutual funds.
– Reduce exposure in direct stocks. Shift part to mutual funds.
– Keep only manageable amount in FDs for safety.
– Balance should be at least 55% equity mutual funds, 45% debt.
– This keeps growth and stability together.
» Lifestyle expectation in retirement
Rs. 2 lakh monthly is your current target. But expenses will rise.
– In 15 years, this can become Rs. 4 lakh monthly.
– In 30 years, Rs. 8 lakh monthly.
– Your portfolio must grow faster than expenses.
– Equity helps to achieve this.
– If you stop investing at 45, growth slows.
So, you may need to continue some form of work or consulting till 50. This will reduce stress on corpus.
» Risk of early retirement
– Emotional boredom is possible after sudden retirement.
– Financial risk of long horizon.
– Dependence on markets at young age.
– Need for continuous rebalancing.
– High medical costs in future.
These must be kept in mind before final decision.
» Finally
You have done amazing work in building Rs. 5.3 crore net worth by 44. But retiring at 45 with Rs. 2 lakh monthly need for 40 years is risky. Inflation and long horizon can reduce wealth. You should restructure portfolio, move away from ULIPs and excess deposits, and rely more on mutual funds with Certified Financial Planner guidance. Also, consider extending work till at least 50. This will give more comfort and flexibility. Retirement at 45 is possible, but sustainability will be a challenge. With balanced strategy, you can retire early and still protect lifestyle.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment