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Ramalingam Kalirajan |10872 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 01, 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 Sanjeev on Jul 10, 2025Hindi

I am 54 year old with savings of PPf 80 lacs,epfo 50 lacs ,nps 10 lac with 50k/annum and 14,000 per month contribution,mf 51 lac and equity 1.2 cr ,one house worth 20. Lac my son is in 10 th Grade and monthly take home 2.2 lac want to retire at 58 is the saving is sufficient for retirement.

Ans: You have built a strong financial base. At 54, with a 2.2 lakh income and diversified savings, your position is positive. You are already thinking about retirement, which is smart. Planning retirement with a child in Class 10 also shows great balance. Retirement at 58 is possible, but a structured approach is key.

Let’s assess your readiness and build a 360-degree plan.

» Summary of Your Current Assets

– PPF: Rs.80 lakh
– EPF: Rs.50 lakh
– NPS: Rs.10 lakh, plus Rs.14,000 monthly + Rs.50,000 annually
– Mutual Funds: Rs.51 lakh
– Direct Equity: Rs.1.20 crore
– House: Rs.20 lakh (not considered for retirement income)
– Total retirement-aligned assets: Over Rs.3 crore

This is a well-distributed asset base. But asset value alone is not enough. Your retirement success depends on future expenses, returns, inflation, and withdrawal discipline.

» Time Left Before Retirement

– You are 54 now
– Plan to retire at 58
– So, 4 active earning years remain
– Your monthly income is Rs.2.2 lakh
– You must invest smartly in these 4 years
– Post-retirement, income may stop or reduce
– That makes next 48 months very important

» Assessing Your Monthly Living Costs

– Your future monthly expenses will decide corpus need
– Assuming Rs.1 lakh current monthly expense
– After 4 years, that may become Rs.1.25 lakh monthly
– Retirement could last 30+ years
– You must plan for inflation till age 85+
– Expenses will double every 10-12 years
– So, retirement corpus must be inflation-adjusted

» Major Future Financial Commitments

– Your son is in Class 10
– So, education cost is around the corner
– Undergraduate + Postgraduate may need Rs.25-40 lakh
– Depends on India or abroad
– This should be kept separate from retirement fund
– Don’t mix child goals with retirement planning
– Keep dedicated funds for education
– Consider reducing equity exposure when education nears

» Retirement Corpus: Is It Enough?

– You already have over Rs.3 crore in savings
– This is strong, but not fully retirement-proof
– Expenses will rise every year post-retirement
– Inflation can eat into your corpus silently
– Even at 6% inflation, purchasing power halves in 12 years
– You need at least Rs.6 crore inflation-adjusted by retirement
– You are on track if you optimise in the next 4 years

» Future Investment Priorities (Pre-Retirement Phase)

– Focus on growing corpus with right risk balance
– Allocate fresh savings into diversified mutual funds
– Prefer regular plans via MFD with CFP for guidance
– Avoid direct funds – they lack support and personalised advice
– Do not use NPS for short-term education needs
– Equity allocation should not cross 60% now
– Include balanced advantage funds or hybrid for stability
– Don’t time the market – continue SIPs regularly
– Keep emergency corpus of at least 6 months’ expenses

» Equity Management Before Retirement

– You have Rs.1.20 crore in stocks
– Ensure you track and rebalance regularly
– Individual stock risk is high post-retirement
– Gradually shift a part to mutual funds
– This creates liquidity and diversification
– Don’t exit stocks suddenly
– Do phased shifting over 24–36 months
– Use Systematic Transfer Plans (STPs) wherever needed
– Actively managed funds offer better downside protection than index funds
– Index funds don’t work well during sideways or volatile markets

» Mutual Fund Strategy for Retirement Planning

– Rs.51 lakh in mutual funds is great
– Focus more on regular plans with MFD and CFP
– Direct funds miss portfolio review and strategic advice
– Regular funds give emotional discipline through expert guidance
– Continue SIPs with moderate-risk funds
– Diversify across multi-cap, large-mid, and balanced advantage
– Add 10-15% to short-duration debt or low-volatility funds
– Avoid investing based on past returns
– Taxation rules have changed
– LTCG above Rs.1.25 lakh is taxed at 12.5%
– STCG taxed at 20% now
– Factor this into withdrawal planning

» EPF and PPF Role in Retirement

– PPF of Rs.80 lakh is a strong base
– It is tax-free and safe
– But withdrawal is limited to maturity rules
– Post-retirement, use it for regular income
– Don’t withdraw in full
– Withdraw in tranches to avoid tax burden
– EPF Rs.50 lakh is also a strong pillar
– Interest is tax-free till retirement
– Convert to VPF if salary hike happens
– EPF withdrawal after 5 years of service is tax-free

» NPS Contribution Evaluation

– Rs.10 lakh NPS corpus with fresh contributions
– Rs.14,000 monthly + Rs.50,000 annually is good
– Keep investing till retirement
– After 58, NPS withdrawal rules apply
– Only part can be withdrawn lump sum
– Balance becomes annuity, which has low returns
– Annuities are illiquid and inflexible
– Don’t over-rely on NPS post-retirement
– Use it only as one income stream

» Real Estate is Not Retirement Income

– One house worth Rs.20 lakh
– Don’t consider it for income
– Real estate is not liquid
– It has poor inflation protection
– Selling takes time and high cost
– Keep it only for living or sentimental value
– Don’t plan retirement withdrawals from it

» Planning Education for Your Son Separately

– Education costs must be separate
– Target at least Rs.25-40 lakh corpus in 6–8 years
– Use dedicated mutual fund SIP for this
– Use growth-oriented funds now
– Shift to safer funds from Class 12 onwards
– Avoid breaking retirement corpus for education
– Don’t mix long-term and short-term goals

» Health Insurance and Contingency Cover

– Medical costs rise fast in retirement
– Take Rs.25 lakh health cover with top-up
– Don’t rely only on employer cover
– Add personal mediclaim if not already done
– Also buy Rs.10-15 lakh for spouse
– Get critical illness cover if possible
– Keep Rs.3–5 lakh emergency fund in liquid form

» Retirement Income Plan (Post 58)

– Don’t withdraw full corpus in one go
– Split withdrawals in 3 buckets:

Short-term: 0–5 years (liquid, arbitrage, short-term debt funds)

Medium-term: 5–15 years (hybrid, balanced advantage funds)

Long-term: 15+ years (equity mutual funds for growth)

– Create SWP (Systematic Withdrawal Plan) for monthly needs
– Keep inflation-adjusted income flow
– Review portfolio every year with MFD + CFP
– Rebalance as per market and goals

» Behavioural Discipline is the Key

– Don’t panic during market correction
– Don’t chase high returns in equity
– Be consistent with investments
– Work with a CFP to review your plan yearly
– Keep asset allocation as per age and goals
– Avoid new products or schemes before research

» Mistakes to Avoid Now

– Don’t over-allocate to equity at 54
– Don’t use risky direct equity for income
– Avoid real estate as income tool
– Don’t use children’s education funds for retirement
– Don’t rely only on NPS or EPF for post-retirement
– Avoid direct mutual funds without advisor support
– Don’t stop SIPs in volatile times

» Finally

– Your current corpus and savings strategy is very good
– Retirement at 58 is possible with discipline
– Education cost for your son should be planned separately
– Stay invested through regular mutual funds
– Take support of CFP for review and corrections
– Next 4 years will decide your financial independence
– Stay focused, stay invested, stay flexible

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.