I am aged 38 years and working at PSU. I have over 18 years of work experience with another 22 years to go. I have planned for VRS in 3 years and I am under OPS with guaranteed pension. Assuming pension to be 20k-25k per month. My monthly income is 1.4 lakh and net income is 1.00 lakh. Below is my savings per month
SIP 42k- present balance 22 lakh
EPF 8k- present balance- 16 lakh
VPF 12k- present balance- 6 lakh
LIC-2700/- per month
PPF - 1.50 lakh/ annum- present balance 13.50 lakh
FD-2.30 lakh- emergency funds
Health Insurance- Covered by employer.
Term Insurance-20 lakh covered by employer.
Spouse is homemaker- saved around 7-8 lakh in her name
Son is 3 years- saved 3 lakh
Daughter is 2 month- saved 50k
Liability NIL
No property either
I want to settle in small town where good education exist. Pension would be enough for rent and monthly expenses. My aim is to reach 1 crore savings and take VRS... Suggest whether fund is enough or push my retirement further and build further corpus.....
Ans: ? Current Financial Snapshot
– You are 38 years old with 18 years in PSU under OPS.
– Monthly gross income is Rs.?1.4 lakh, net Rs.?1 lakh.
– You plan VRS in three years and expect pension of Rs.?20k–25k monthly.
– Present savings include:
SIPs: Rs.?42k pm (balance Rs.?22 lakh)
EPF: Rs.?8k pm (balance Rs.?16 lakh)
VPF: Rs.?12k pm (balance Rs.?6 lakh)
LIC: Rs.?2.7k pm
PPF: Rs.?1.5 lakh per annum (balance Rs.?13.5 lakh)
Emergency FD: Rs.?2.3 lakh
Spouse savings: Rs.?7–8 lakh
Children: Son has Rs.?3 lakh; daughter has Rs.?50k
– You have no liabilities or property.
This shows strong discipline in savings and debt-free status.
? Pension Security Under OPS
– OPS gives defined post-retirement pension.
– Pension of Rs.?20k–25k may cover basic expenses in small town.
– But it will not support lifestyle increases or children’s needs.
– Pension lacks inflation protection over time.
– Retirement corpus needs to generate additional income.
OPS is a strong base but not enough for family or education needs.
? Emergency Fund Strengthening
– Current FD of Rs.?2.3 lakh covers ~2 months’ expenses.
– Aim to increase emergency fund to 6 months’ expenses.
– That means raising it to Rs.?4.5–5 lakh.
– Use liquid or short-term debt funds to build it.
– Keep it separate from SIPs and long-term funds.
A cushion of six months ensures calm cash flow during emergencies or transition.
? Term and Health Insurance Assessment
– Employer provides term and health coverage.
– Term cover may end with VRS.
– Plan for private term insurance of at least Rs.?1 crore.
– Health cover should continue post-VRS.
– With children, family floater of Rs.?15–20 lakh is advisable.
Protection coverage must persist beyond employment for family safety.
? Insurance-Investment Mix Review
– LIC monthly premium shows you hold an investment-linked plan.
– Such plans offer low returns and long lock-in.
– Consider surrendering and move amount into mutual funds.
– Use term insurance for protection, not investment.
– This simplifies finances and improves returns.
Investment-linked insurance plans are inefficient; switching to mutual funds gives better clarity and growth.
? Retirement Corpus Goal Evaluation
– You desire Rs.?1 crore in three years.
– With current SIPs, EPF, VPF, and PPF, corpus might reach Rs.?70–80 lakh.
– This falls short of Rs.?1 crore.
– Combined with pension, it may suffice if timing is correct.
– But safe retirement demands higher corpus.
If comfort with VRS in 3 years is high, you may stay on track. Otherwise, consider extending career by 2–3 years.
? Should You Postpone VRS?
– Retiring in three years leaves minimal buffer.
– Children’s education and healthcare costs loom ahead.
– Pension may not keep pace with inflation.
– Extending working period builds more financial strength.
– Assess personal motivations, health, and family needs.
It may be safer to delay VRS until age 45 or after building Rs.?1.2 crore+ corpus.
? Asset Allocation Snapshot
Current steps:
– SIPs contribute 42%; EPF and VPF add another 20%.
– PPF adds further equity-like safety.
– FD acts as emergency buffer.
To build balanced corpus, ensure:
– Regular review of fund types to avoid overexposure to equity risk or underexposure to safety.
? Equity Mutual Fund Strategy
– Continue monthly SIPs of Rs.?42k in equity funds.
– Use actively managed funds only.
– Avoid index funds—they offer no buffer during downturns.
– Fund managers can reduce risk and enhance returns tactically.
– Ensure fund mix covers large-cap, flexi?cap, and small?cap.
– Review performance at least annually with CFP assistance.
– Step-up SIP yearly by 10–15%.
Active management will help protect corpus as retirement nears.
? Role of EPF & VPF in Retirement
– EPF balance of Rs.?16 lakh and VPF of Rs.?6 lakh are strong.
– These are low-risk but inflation-proof to some extent.
– They serve as core debt-like pillar for corpus.
– Continue current monthly contributions.
These pillars support corpus and provide essential stability.
? PPF for Long-Term Security
– PPF balance is Rs.?13.5 lakh.
– It offers safe, tax-free returns.
– Continue annual contributions of Rs.?1.5 lakh.
– It complements retirement income via OPS.
– Review yearly with rising interest rates.
PPF adds inflation-resilient pillar to your retirement planning.
? VRS Corpus Top-Up Strategy
– Your VRS corpus requirement depends on age and expenses.
– Pre-VRS withdrawal of EPF or VPF may affect tax and corpus.
– Build liquid, bankable buffer for post-VRS transition.
– Consider having Rs.?10–12 lakh in liquid/debt at retirement.
– This helps us bridge salary to pension period.
A buffer ensures stability during the employment-to-retirement transition.
? Children’s Education & Life Goals
– Your son (3 yrs) has Rs.?3 lakh; daughter (2 months) has Rs.?50k.
– These are good starts but need systematic growth.
– Start SIPs in children funds for both.
– Allocate based on education timelines of 12–15 years.
– Use hybrid or cautious equity funds for these goals.
– Consider opening minor PPF accounts under guardianship.
Goal based investing ensures purpose and control in reaching future needs.
? Emergency and Education Corpus
– Keep children’s money separately in goal-based accounts.
– Use liquid or short-term debt for near-term needs.
– Avoid dipping into retirement or OPS corpus prematurely.
– Allocate monthly for each child goal using SIPs.
Segregation of funds prevents confusion and misuse.
? Asset Diversification Updates
Your portfolio across instruments:
– Equity SIP: major growth driver
– EPF/VPF/PPF: core debt buffers
– FD: emergency buffer
– LIC: insurance-investment blend (to be surrendered)
– Children’s corpus: moderate risk
– Health and term cover under employer
You have no real estate, other debt, crypto, or speculative assets.
? Monthly Investment Plan Suggestion
Allocate surplus Rs.?58k (after SIP, EPF, VPF, LIC, expenses):
– Continue equity SIP Rs.?42k
– Continue EPF Rs.?8k and VPF Rs.?12k
– Top-up emergency fund by Rs.?10k monthly until Rs.?5 lakh
– Start child education SIPs: Rs.?5k per child
– Redirect LIC premium after surrender to gold or hybrid fund
– Monitor allocation yearly with CFP
Structured surplus ensures readiness for retirement, children, and emergencies.
? Retirement Asset Allocation at VRS
At age 41 (post-VRS):
– Pension Rs.?20–25k covers basics
– Corpus of Rs.?1 crore can generate additional income
– Allocate corpus at 60% equity, 30% debt, 10% hybrid/liquid
– Use SWP to withdraw a fixed amount monthly
– Keep buffer to handle market dips
This creates an investment?plus?pension approach for stability and growth.
? Debt vs Equity Rebalancing as You Age
– Reduce equity exposure as VRS nears
– At VRS, shift 10–15% to conservative/hybrid or debt
– By age 45, equity exposure should be around 50%
– This reduces volatility during withdrawal phase
– Use CFP to implement strategic rebalancing
Gradual risk reduction enhances safety without large shocks.
? Tax Strategies for Retirement
– EPF and PPF interest are tax-free
– VPF withdraws taxed if EPF locked less than 5 years
– Equity LTCG taxed at 12.5% above Rs.?1.25 lakh annually
– STCG taxed at 20% for short-term redemptions
– Debt gains taxed per income slab
– Plan redemption timing to reduce tax impact
Tax efficiency preserves more of your hard-earned gains.
? Health Cover Post-Retirement
– Employer health cover ends with VRS
– Buy individual/family floater of Rs.?15–20 lakh
– Children should be covered from birth
– Include maternity or critical illness riders if needed
– Review and renew annually
Keeping health cover constant ensures peace-of-mind and expense control.
? Children’s Education & Future Planning
– Education costs may escalate 10–12% annually
– Start goal-based SIPs for high school and college funds
– Consider small-cap exposure for high growth potential
– Use hybrid for mid-term stability
– Lock incremental savings as goals approach
This ensures children’s education is funded without stress or compromise.
? Estate Planning & Will Creation
– Draft a will reflecting all assets post-VRS
– Nominate spouse and children across accounts
– Keep guardianship decisions documented
– Store will and financial documents securely
– Updates may be done when significant life changes occur
This protects your legacy and family’s financial security.
? Passive Income Potential
Beyond pension or SWP, you can explore:
– Part-time consulting using PSU expertise
– Online teaching or content creation
– Homestay or online rental (if real estate is ever considered)
– Royalty from small digital products or tutorials
– Keep passive income small but helpful
Additional income reduces reliance on corpus and provides flexibility.
? Decision on VRS Timing
– If you retire in 3 years, you will have Rs.?60–80 lakh corpus + pension
– This may suffice if children’s and lifestyle costs are moderate
– However, with retirement age extended and delayed aspirations, Rs.?1 crore+ corpus is safer
– If finances feel tight at age 41, delaying VRS by 2–3 years builds more power
– Lifestyle comfort depends on age, destination, and future goals
Deciding on VRS must balance emotional readiness with financial readiness.
? Annual Review and Course Correction
– Meet a Certified Financial Planner each year
– Review fund allocation, risk exposure, and savings rate
– Revise goals for children, retirement, and health
– Adjust SIP amounts and fund types as needed
– Implement rebalancing to maintain target portfolio structure
Annual review ensures proactive progress and avoids last-minute shocks.
? Lifestyle Inflation Control
– Monitor household costs yearly
– Limit discretionary spending increases
– Larger purchases should come after review
– Allocate fixed % to future plans and children, not just consumption
– Share financial goals with spouse for mutual support
Shared awareness curbs lifestyle creep and protects savings goal.
? Final Insights
– Your current assets under management are a strong base.
– VRS in 3 years is okay, but delay if you need more cushions.
– Building Rs.?1 crore corpus plus pension gives flexibility.
– Continue disciplined SIP, EPF, VPF, PPF contributions.
– Improve emergency buffer and sell LIC for better returns.
– Start children’s education SIPs immediately.
– Plan health and term cover beyond employment.
– View retirement as phased financial transition.
Take advice, review annually, and progress steadily—then VRS will be a confident, thriving next chapter.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
