I am 47 yrs with wife and two daughters ( 20y & 16y). Expected education & marriage exp approx 1.5cr
We have
Residing my own home which enough for life time. No need to buy new house.
3cr property ( patronage three home, shop)
60L ppf
3 crore in equity + mf + nps.
1cr : Savings account + fd
2cr : Gold + silver
My business income approx 40L per annum.
My yearly expense 8L per annum.
How & when should I retire.
Ans: Assessing Your Financial Goals and Needs
Your current assets, income, and expenses indicate strong financial stability.
You aim to manage Rs 1.5 crore for education and marriage for your daughters.
You have no additional housing requirements, simplifying your retirement planning.
Your business income and existing investments provide a robust foundation for financial independence.
Analysing Your Current Financial Position
Net Worth Overview:
Rs 3 crore in property holdings (excluding residence).
Rs 60 lakh in PPF, ensuring stable long-term growth.
Rs 3 crore in equity, mutual funds, and NPS for wealth creation.
Rs 1 crore in savings accounts and FDs for liquidity.
Rs 2 crore in gold and silver, acting as a hedge against inflation.
Total net worth: Rs 9.6 crore, with Rs 40 lakh yearly income.
Evaluating Your Retirement Readiness
Expenses vs. Income:
Yearly expenses: Rs 8 lakh, leaving significant surplus from business income.
This surplus allows you to continue wealth accumulation before retirement.
Future Liabilities:
Rs 1.5 crore is earmarked for daughters' education and marriage.
You can comfortably fund these liabilities with current assets.
Current Lifestyle:
Your lifestyle expenses are well within manageable limits.
Assuming post-retirement expenses are 70-80% of current expenses, Rs 6-7 lakh annually would suffice.
Strategic Recommendations for Retirement Planning
Retirement Corpus Estimation:
Assuming Rs 7 lakh annual expenses post-retirement and inflation at 6%, your corpus should last 35+ years.
Allocate Rs 3.5 crore for retirement needs.
Streamline Investments:
Review and balance equity and mutual funds for active fund management.
Consider reducing exposure to direct stocks if risks seem high.
Avoid direct mutual fund investing to benefit from MFDs and CFP expertise.
Property Utilisation:
Your real estate holdings could generate passive rental income.
Estimate rental potential from the three homes and shop for steady cash flow.
PPF and Gold Investments:
Continue holding PPF to secure risk-free returns.
Retain gold and silver as they hedge against inflation and currency risk.
When Should You Retire?
Current Age: 47 years.
Business Income Dependency: Your business generates Rs 40 lakh annually, far exceeding your expenses.
If you wish to retire early, you could consider stepping back at 55 years, provided your assets grow sufficiently.
Flexibility: The choice to retire can depend on personal preferences or business health.
Post-Retirement Income: Passive income sources, including rental and dividends, can sustain your retirement.
Actionable Steps Before Retirement
Daughters' Education and Marriage:
Allocate Rs 1.5 crore in short- to medium-term funds.
Actively manage this amount to align with timelines.
Portfolio Diversification:
Ensure a mix of equity, debt, and gold for stable returns.
Reduce reliance on direct equity; opt for well-managed mutual funds.
Tax Optimisation:
Review tax implications for equity and debt mutual funds.
LTCG above Rs 1.25 lakh in equity mutual funds is taxed at 12.5%.
STCG is taxed at 20%. Adjust withdrawals accordingly to minimise tax outflow.
Health and Life Insurance:
Ensure adequate health coverage for the family.
Consider term insurance if liabilities exist or as a safety net for dependents.
Create Passive Income Sources:
Explore rental income potential.
Invest in funds offering dividends for post-retirement cash flow.
Emergency Fund:
Maintain Rs 20-30 lakh as an emergency fund in liquid form.
Estate Planning:
Draft a will to ensure a smooth transfer of assets to heirs.
Include clear instructions regarding properties and investments.
Final Insights
Your financial health is exemplary, and you are well-positioned for retirement. With thoughtful planning and execution, you could retire comfortably even before 55. Aligning investments with goals and managing risks will ensure financial independence for life.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment