I am a 50 year old divorced IT consultant with a monthly take home of 2.7 lakhs per month. I have a rental income of 30k per month from an apartment which is completely paid for worth around 1 crore [but jointly owned with my ex]. I have around 1.3 crore in Mutual Funds, 25 Lakhs in debt funds and 30 lakhs in direct stock after division of assets with my ex wife. I also have properties worth around 1.6 crores to my name. My daughter is currently in 8th standard and the cost of her education till 12th is also covered through a trust fund. I have a PPF of some 17L right now. I have one of those LIC schemes where I have a guaranteed return of 60L by age 58 if I pay an additional 8 Lakhs across next 8 years. My PF should be around 18 lakhs but it has some name related complications and whether I will get it from the government is subject to speculation, if I get it I will consider it a windfall. My current outstanding is a vehicle loan EMI of Rs. 21k per month, 12K per month for Insurance (with savings). I am checking to see whether I am in a position to retire now. I have some health issues related to my knee on which I have been advised Physiotherapy but the work pressure is keeping me away from regular exercise and keeping me overweight. I am wondering whether I have enough saved up to retire to a village in Tamil nadu, where my monthly living expenses should be under 15K initially (I had done a trial retirement last year). I am wondering these days whether I should retire early before my initial target corpus is achieved. My initial target corpus was 2.7 crore in MF+ Debt for retirement in addition to the rental but I am now wondering whether I am ready to proceed to retirement now. Mostly I want to leave a good inheritance to my daughter and I am not sure whether I have enough for the same. I should also mention my ex is also has a similar networth in MF+FD+Property except that she is earning much less

Ans: At 50, considering early retirement is a significant decision. It is essential to carefully assess your financial stability and future requirements. Below is a detailed analysis and recommendations based on your situation.

1. Understanding Your Current Financial Position
You have Rs. 1.3 crore in mutual funds and Rs. 25 lakhs in debt funds.

Your direct stock portfolio is worth Rs. 30 lakhs.

Your PPF balance stands at Rs. 17 lakhs.

You expect Rs. 60 lakhs from a guaranteed LIC scheme at age 58.

Your rental income is Rs. 30,000 per month from an apartment.

Your vehicle loan EMI is Rs. 21,000 per month.

Insurance premium is Rs. 12,000 monthly.

Your expenses during a trial retirement were Rs. 15,000 monthly.

Your net property worth (excluding the shared apartment) is Rs. 1.6 crore.

2. Key Considerations for Early Retirement
Monthly Income Sufficiency
The rental income of Rs. 30,000 exceeds your estimated living expenses of Rs. 15,000.

However, future inflation will increase your expenses significantly.

Health and Lifestyle
Knee-related health issues may lead to higher medical costs later.

Regular physiotherapy and weight management should be prioritised.

Corpus and Growth
Your current financial corpus may not grow sufficiently without active investments.

Aim for a balanced portfolio with equity and debt for long-term growth.

Daughter’s Inheritance
Your focus on leaving a good inheritance is valid.

Ensure your investments align with this goal.

3. Evaluating the Feasibility of Early Retirement
Corpus Target vs. Current Assets
Your target corpus of Rs. 2.7 crore in MF and debt funds is slightly unmet.

Current assets in MF, debt, and stocks total Rs. 1.85 crore.

You are 70% towards the target, which is promising.

Guaranteed Returns from LIC
The LIC policy will provide Rs. 60 lakhs by age 58.

You must pay Rs. 8 lakhs over the next 8 years to receive this.

Contingent PF Corpus
Consider your PF corpus of Rs. 18 lakhs a bonus if recovered.

Exclude it for current retirement planning due to uncertainty.

4. Recommendations for Financial Stability
Review Your Investments
Reassess your mutual fund portfolio for consistent performers.

Invest through a Certified Financial Planner to optimise returns.

Address Low-Yield Assets
LIC offers guaranteed returns but limits growth potential.

Evaluate reinvesting in equity funds if surrendering is beneficial.

Diversify Your Portfolio
Reduce dependency on direct stocks to minimise risks.

Balance your portfolio with flexi-cap and balanced mutual funds.

Maintain Emergency Corpus
Keep at least 12 months’ expenses (Rs. 2.4 lakh) in a liquid fund.
5. Planning for Medical Costs
Purchase comprehensive health insurance to manage rising medical costs.

Create a separate corpus for potential surgeries or prolonged treatments.

6. Lifestyle Adjustments for Health
Focus on regular physiotherapy to avoid worsening your condition.

Reduce work pressure immediately if health deteriorates further.

7. Tax Efficiency in Retirement
LTCG on mutual funds above Rs. 1.25 lakh is taxed at 12.5%.

Minimise taxes by strategically withdrawing gains.

Invest surplus in tax-efficient funds for post-retirement income.

8. Strategies for Leaving an Inheritance
Invest in growth-oriented mutual funds for wealth creation.

Avoid unnecessary withdrawals from your corpus.

Nominate your daughter across all investments for easy transfer.

9. Steps to Transition to Retirement
Retire in phases by gradually reducing work commitments.

Start living within Rs. 15,000 monthly expenses immediately.

Continue earning part-time consultancy income if possible.

10. Final Insights
Early retirement is achievable with disciplined financial planning. Focus on aligning your corpus with your goals. Ensure health, inheritance, and lifestyle are balanced. A Certified Financial Planner can guide you to achieve sustainable financial independence.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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