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Retirement Planning at 47: Can I Retire in 2035?

Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jan 28, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by J. on Jan 28, 2025Hindi

I am 47 years old, monthly expance 50k, i have own 4bhk flat,25l in saving account,10l in equity,60l plot,10 acre agriculture land of approx value 3 cr..how to retire by 2035?

Ans: At 47 years old, you have a strong foundation for planning your retirement by 2035. Let’s summarise your financial position:

Monthly Expenses: Rs 50,000.
Home Ownership: You own a 4BHK flat, eliminating the need for rental expenses.
Savings Account: Rs 25 lakh in liquid savings.
Equity Investments: Rs 10 lakh.
Plot: Rs 60 lakh in value.
Agricultural Land: 10 acres valued at approximately Rs 3 crore.
Your financial assets are diversified, but much of your wealth is locked in immovable assets. This requires careful planning to ensure liquidity and sustainable retirement income.

Analysing Your Retirement Goals
You plan to retire in 2035, which is 12 years away. Key considerations include:

Corpus Requirement: Your current monthly expense of Rs 50,000 will increase due to inflation. By 2035, at 6% inflation, your expenses could double to Rs 1 lakh per month.
Retirement Horizon: Post-2035, you may need to plan for at least 25–30 years without active income.
Wealth Creation Needs: You must convert your existing assets into income-generating investments to sustain post-retirement expenses.
Your retirement plan must focus on balancing liquidity, growth, and income generation.

Recommendations to Achieve Retirement Goals
1. Build an Emergency Fund
An emergency fund ensures financial stability in case of unexpected expenses.

Set Aside Rs 10 Lakh: From your savings account, allocate Rs 10 lakh to a liquid fund or fixed deposit.
Maintain Accessibility: Keep these funds easily accessible for emergencies or unforeseen events.
2. Optimise Your Savings
Your Rs 25 lakh savings account can be better utilised for higher returns.

Invest in Debt Mutual Funds: Move Rs 15 lakh into debt mutual funds for better returns than a savings account.
Maintain Liquidity: These funds are low-risk and provide flexibility in case of need.
3. Review and Diversify Your Investments
Your Rs 10 lakh equity portfolio needs to align with your retirement goals.

Retain Equity for Growth: Equity investments are essential to beat inflation. Retain this portfolio and increase contributions.
Invest in Actively Managed Funds: Avoid index funds, as they may not outperform the market consistently. Actively managed funds offer higher potential.
Increase Equity Exposure: Gradually increase your equity allocation through SIPs in mutual funds. This helps build a larger corpus over time.
4. Monetise Your Real Estate Assets
Your wealth is heavily concentrated in real estate, which lacks liquidity.

Sell the Plot: Consider selling the Rs 60 lakh plot. Use the proceeds for diversified investments in mutual funds and fixed-income instruments.
Utilise Agricultural Land: If the land isn’t generating income, explore leasing options for steady cash flow. Avoid selling agricultural land if it has emotional or long-term value.
5. Plan for Post-Retirement Income
Generating regular income post-retirement is critical for financial independence.

Invest in Balanced Portfolios: Allocate funds into balanced mutual funds that combine equity and debt for stability and growth.
Systematic Withdrawal Plans (SWPs): Use SWPs from your mutual fund investments to create a regular income stream after retirement.
Avoid High-Risk Options: Focus on low-risk, income-generating investments to preserve your capital during retirement.
6. Inflation-Proof Your Corpus
Rising costs due to inflation must be addressed in your retirement plan.

Increase Equity Investments Gradually: Equity is essential to combat inflation and grow your corpus. Aim for 40–50% equity allocation.
Rebalance Portfolio Periodically: Adjust your portfolio every 2–3 years to maintain an appropriate mix of equity and debt.
7. Plan for Tax Efficiency
Efficient tax planning ensures better utilisation of your income and investments.

Debt Mutual Funds Taxation: Gains from debt funds are taxed as per your income slab. Plan withdrawals carefully to reduce tax impact.
Equity Mutual Funds Taxation: Long-term capital gains above Rs 1.25 lakh are taxed at 12.5%. Redeem equity investments in phases to optimise tax liability.
8. Secure Your Family’s Financial Future
Ensuring financial security for your family is a key aspect of retirement planning.

Life Insurance: Review your existing life insurance to ensure it provides adequate coverage. A sum assured of Rs 1–2 crore is ideal.
Health Insurance: Ensure you and your family have comprehensive health insurance to cover medical expenses.
9. Year-by-Year Breakdown
Here’s a suggested plan to build your retirement corpus year by year:

Year 1–3
Sell the Rs 60 lakh plot and reinvest the amount.
Allocate Rs 20 lakh to equity mutual funds and Rs 40 lakh to debt funds.
Build an emergency fund of Rs 10 lakh from savings.
Year 4–7
Increase SIP contributions to equity mutual funds for long-term growth.
Generate rental or leasing income from agricultural land.
Rebalance your portfolio to maintain a 50:50 equity-to-debt ratio.
Year 8–12
Reduce equity exposure gradually to lower risk as you near retirement.
Focus on creating a stable income stream through SWPs.
Preserve your emergency fund and keep it accessible.
Finally
Retirement by 2035 is achievable with disciplined planning and asset optimisation. Focus on liquidity, diversification, and income generation to ensure a comfortable and financially independent retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.