Sir I am 49 years, I am taking VRS in Dec 2024 due to some health issues. I will get Rs. 1.12 cr (without commutation) and pension of 65000+. I wish to get 60000 extra per month on average from the above amount. My expenses would be managed from pension. Please suggest plan for the goal. I can do SWP for maximum 30 lakh.

Ans: Here are some options to consider for regular monthly/quarterly income after retirement, besides SCSS, PO MIS, and MF SWP (Systematic Withdrawal Plan):

Annuity Plans: These insurance products offer you a guaranteed income stream for life (or a chosen term) in exchange for a lump sum investment. They provide stability but may offer lower returns compared to some other options.

Senior Citizen Savings Scheme (SCSSM): This government scheme offers higher interest rates than regular fixed deposits specifically for retirees above 60. However, there's a lock-in period and a maximum investment limit.

Rental Income: Consider investing in rental properties that can generate a steady monthly income. However, this involves property management responsibilities and potential vacancies.

Dividend Stocks: Invest in companies with a history of paying regular dividends. This can provide a regular income stream, but dividends are not guaranteed and can fluctuate.

Bonds: Bonds, especially government bonds, offer regular interest payments. However, their returns might be lower compared to stocks.

Remember:

Talk to a Financial Advisor: A financial advisor can assess your risk tolerance, retirement goals, and income needs to recommend the best options for you.
Diversification is Key: Don't rely on a single source of income. Consider a mix of options to balance risk and reward.
Plan for Inflation: Factor in inflation to ensure your income stream keeps pace with rising living costs.

Ans: Congratulations on your retirement and taking steps towards financial planning for the future. It's wonderful that you have a clear goal in mind and are actively investing to achieve it.

With your terminal benefit invested mainly in bank FDs with monthly payout, along with a steady monthly pension and rental income, you have a reliable income stream to cover your expenses and support your daughter's education.

Starting SIPs in mutual funds is a smart move to grow your wealth over the long term. Your choice of funds reflects a diversified approach, covering different market segments and investment styles. It's essential to monitor the performance of these funds regularly and make adjustments as needed to stay on track towards your financial goals.

Your goal of reaching a corpus of 2-3 crores in the next 10 years is ambitious but achievable with disciplined saving and investing. Given your current investments and income sources, along with your SIP contributions, it's important to ensure that your investment strategy aligns with your risk tolerance and time horizon.

Consider consulting with a Certified Financial Planner to review your overall financial plan, assess your risk profile, and make any necessary adjustments to optimize your investment strategy. They can provide personalized guidance to help you achieve your financial goals while maintaining financial security and peace of mind.

Continue to stay focused on your goals, and with prudent financial management, you can build a substantial corpus for a comfortable and secure future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: It's commendable that you have taken proactive steps towards securing your financial future. Given your current situation, let's outline a plan to achieve a sustainable monthly income of 50,000 rupees through a Systematic Withdrawal Plan (SWP).

Assessing Current Financial Status
You have a well-balanced portfolio:

Mutual Funds (MF): 35 lakh rupees
Fixed Deposit (FD): 5 lakh rupees
Term Policy: 80 lakh rupees
Joint Health Insurance: 10 lakh rupees
No Loans
Take Home Salary: 1.5 lakh rupees
Monthly Expenditure: 50,000 rupees
Understanding SWP (Systematic Withdrawal Plan)
An SWP allows you to withdraw a fixed amount from your mutual fund investments regularly. To generate 50,000 rupees per month, you need to consider the longevity of your investments and expected returns.

Required Fund for SWP
To calculate the corpus needed, we assume a conservative annual return of 8% from your investments and a withdrawal period of 30 years.

So, the rough estimate works out to Rs 75 Lacs.

Building the Corpus
You currently have:

Mutual Funds: 35 lakh rupees
Fixed Deposit: 5 lakh rupees
Total current savings: 40 lakh rupees

You need to bridge the gap between 40 lakh rupees and 75 lakh rupees, which is 35 lakh rupees.

Increasing SIP Contributions
Given you are 59 years old, aiming to accumulate this amount before retirement requires increasing your SIP contributions significantly. Let's assume you plan to retire in 5 years.

Calculating SIP Requirement
To bridge the gap of 35 lakh rupees in 5 years, assuming an average annual return of 12% from your mutual fund SIPs.

Making It Feasible
Since 43,000 rupees might be a high SIP amount, consider the following adjustments:

Increase SIP gradually: Start with a feasible amount and increase it annually.
Consider lump-sum investments: Any bonuses or extra income can be added to your mutual funds to boost the corpus.
Conclusion
To achieve a 50,000 rupee monthly SWP, you need to accumulate approximately 75 lakh rupees. Start with a higher SIP contribution around 43,000 rupees, adjusting based on feasibility, and consider lump-sum investments. Regular reviews with a Certified Financial Planner will ensure you stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

You may begin a monthly sip into a combination of pure equity mutual funds (70 K) and hybrid funds like balanced advantage and multi asset funds(30 K).

This mix may yield you a corpus of 5.36 Cr after 16 years.(Returns from pure equity mutual funds are assumed at 12% and from hybrid mutual funds at 9%)

If you use this corpus to buy an immediate annuity from a life insurance company it may provide you a monthly payout of around 2 L (post-tax).(6.5% annuity rate considered)

This coupled with your pension of 1 L+ will ensure monthly income of 3 L+ in retirement.

As you reach closer to your retirement please ensure to transfer your gains to liquid or ultra short duration debt funds to protect it against market volatility.

Ensure a good critical illness cover, in retirement, despite Govt health schemes.

Happy Investing;