Should I retire at 45 with 15 lakhs in PF, 20 lakhs from LIC, 65 lakhs in SIP, 3 plots, 2 acres of farmland, 2 houses, and a monthly savings of 50k?

Ans: At 45, you’re in a strong financial position with multiple assets, regular savings, and insurance coverage. However, retirement readiness depends on your future goals, current lifestyle, and family needs. Let's analyse your situation from various angles and offer a 360-degree view.

Evaluating Your Current Financial Situation
Provident Fund (PF): You have Rs 15 lakh in PF, which will grow over time. This amount, combined with regular EPF contributions, will form a strong base for retirement.

LIC Maturity: Your LIC policy maturing in 2032 will give you Rs 20 lakh. This lump sum can be useful for post-retirement expenses or reinvestment.

SIPs: With Rs 65 lakh in mutual funds and continued SIP contributions, your portfolio is in good shape. Continuing your Rs 40,000 SIP will help this amount grow substantially by retirement. This long-term wealth creation is critical for post-retirement financial stability.

Real Estate: You own 3 plots, 2 acres of farmland, and 2 houses. While real estate can provide stability, liquidity might be an issue unless you sell or rent out these properties.

Monthly Savings: Your monthly savings of Rs 50,000 are commendable. This shows disciplined financial planning, which will greatly benefit your long-term goals.

Insurance: Having term insurance and medical insurance is essential, and you’ve covered those aspects well. This will protect your family and safeguard against unforeseen events.

Analysing Key Aspects Before Retiring
Retirement Corpus: To retire, your total investments and savings must be sufficient to cover your post-retirement expenses for the next 30-40 years. While you have strong savings, evaluating your retirement corpus against expected expenses is critical.

Monthly Expenses: Estimate your current monthly expenses and adjust them for inflation. Expenses will continue even after retirement, so it’s important to assess if your savings can cover them over the long term. Factor in inflation at around 6%-7% annually.

Children’s Education: Your child is currently in the 7th standard. You need a separate fund for their higher education, which could be a significant expense. With no dedicated savings for this, it's important to start a targeted investment plan soon.

Medical Expenses: Healthcare costs can be significant during retirement. Ensure your health insurance is adequate, and consider increasing your coverage as medical inflation rises faster than normal inflation.

Is It the Right Time to Retire?
Given your current financial standing, you have a solid foundation. However, considering key future needs, it may not be the best time to retire yet. Let's explore some considerations before making a final decision.

Strengths in Your Current Financial Plan
Strong SIP Investments: With Rs 65 lakh already invested and ongoing contributions, your portfolio will continue to grow. SIPs offer long-term wealth creation, especially in equity mutual funds. This is essential for a comfortable retirement.

Debt-Free Situation: You have no loans, which is a major advantage. A debt-free retirement means less pressure on your cash flow and investment returns.

Real Estate Assets: Owning real estate provides financial security, though it lacks liquidity. If needed, you could consider selling or renting out properties to generate income during retirement.

Areas That Need Improvement
Children’s Education Fund: You currently don’t have a dedicated fund for your child's education. Education costs can be substantial, especially for higher education. It’s important to create an investment plan specifically for this purpose. You can consider SIPs or debt funds, depending on the timeline.

Retirement Corpus Calculation: To retire early, you need to ensure your retirement corpus is large enough to sustain your lifestyle for the next 30+ years. With your current savings, you are on the right track, but this needs to be calculated precisely with the help of a Certified Financial Planner.

Future Income Source: After retirement, you will need a steady source of income. While your mutual fund investments can generate returns, consider starting a Systematic Withdrawal Plan (SWP) closer to your retirement date to ensure regular income.

Should You Retire Now?
It might not be the best time to retire at 45. Although you have a solid base, there are a few reasons why continuing to work for a few more years would be beneficial:

SIP Growth: Continuing your SIP for another 10-15 years could significantly grow your mutual fund corpus. Compounding works best over the long term, and retiring now may halt this potential growth.

Education Costs: You still need to plan for your child’s higher education. Building a corpus for education will reduce financial stress in the coming years.

Increased Healthcare Costs: Medical expenses tend to increase with age. Ensuring you have sufficient savings or health insurance to cover future medical needs is critical.

Inflation-Proofing Your Retirement: Inflation erodes the purchasing power of money. Retiring early could mean a longer retirement period, increasing the impact of inflation. Working for a few more years could help you build a larger corpus, better adjusted for inflation.

How to Plan for a Secure Retirement
Start a Child Education Fund: Consider starting a separate investment plan for your child’s education. Based on your child’s age, you may have around 5-7 years to save. You can invest in a mix of debt and balanced funds for a safer yet growth-oriented approach.

Increase Health Insurance: As medical inflation is on the rise, consider increasing your health insurance cover. A family floater plan or top-up policy can ensure your medical costs are covered in retirement.

Continue SIP Investments: Continue your SIP contributions to grow your portfolio. As equity markets tend to generate higher returns over time, your corpus will benefit from the power of compounding.

Systematic Withdrawal Plan (SWP): Closer to retirement, consider shifting a portion of your mutual funds to debt funds and start an SWP. This will give you a regular income while keeping your money invested.

Monitor Your Expenses: It’s crucial to track your expenses closely. If your current expenses are manageable, ensure that your retirement corpus can sustain those expenses, adjusted for inflation, over a 30+ year retirement.

Consider Part-Time Work: If you are not fully ready to retire, you can consider part-time work or consultancy. This will provide additional income without the full commitment of a regular job.

Best Time to Retire
To retire comfortably, it’s recommended to work for a few more years until your financial situation is more robust. You could consider retiring between the ages of 50 to 55, once your child’s education fund is in place, and your mutual fund corpus has grown further. This will give you more security and flexibility in your post-retirement life.

Final Insights
Retiring at 45 can be an exciting prospect, but given the key considerations of your child’s education, ongoing healthcare needs, and the potential growth of your SIPs, it’s advisable to wait.

Your financial base is strong, but continuing to work will provide additional security. By planning carefully, starting a child education fund, and maintaining your SIPs, you will be well-prepared for a comfortable and financially secure retirement in a few years.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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