55 and Wanting to Retire: Achieve a Rs. 2 Lakh Monthly Income with Rs. 5 Crore+!

I am 55 and want to retire. I have Rs. 100 lacs in EPF, Rs. 35 lacs in PPF, Rs. 35 lacs in NSC, Rs. 45 lacs in NPS, Rs. 55 lacs in MF, Rs. 50 lacs in FD, Rs. 10 lacs in LIC, Rs. 30 lacs in superannuation fund, Rs. 55 lacs in business, Rs. 110 lacs in housing property (2 flats). What investment planning I should do to get monthly income of Rs. 2 lacs? How much corpus I will have at the age of 65 years with proposed investment plan?

Ans: Hello;

Your current total corpus adds upto around 3.7 Cr. (Excluding NPS part of which will get annuitized at 60 age & RE properties).

If you buy an immediate annuity for this corpus you may expect to receive monthly payout of around 2 L(pre-tax) assuming 7% as annuity rate.

I presume you have occupied one flat for self use and other flat is let out on rent.

The rental income per month from one flat and annuity from balance 40% of NPS(after 60 age) will be your surplus income over and above 2 L as envisaged.

You may opt for annual increase in annuity which is a feature offered by some life insurers.

I do not advise retirement corpus to be exposed to equity considering risks involved hence corpus will remain 4 Cr at 65 unless you decide to sell the extra flat or add lumpsum of NPS corpus (60%) to your sum for more annuity income.

Happy Investing!!

Ans: You are planning ahead. That is a smart and timely decision.

You are 44 now. You want Rs. 2 lakhs/month after age 55.

You still have 11 years to plan. That is a good time frame.

Let us build a complete financial plan for your early retirement.

? Current Financial Snapshot

– EPF balance is already at Rs. 1 crore. That gives a strong base.

– Stocks at Rs. 25 lakh. Good exposure to long-term growth.

– Mutual funds at Rs. 11 lakh. Needs further strengthening.

– NPS at Rs. 11 lakh. Offers retirement-linked tax benefits.

– Monthly income is Rs. 2.1 lakh. Surplus is around Rs. 1.25 lakh.

– SIPs of Rs. 45K in mutual funds are well structured.

– SIPs of Rs. 55K in ETFs need review. ETFs are index funds.

– EPF deduction of Rs. 72K/month is building wealth passively.

– You are paying Rs. 1L + Rs. 50K + Rs. 40K in insurance policies.

? Annual Surplus and Utilisation

– Monthly surplus is about Rs. 1.25 lakh.

– Annually, this is nearly Rs. 15 lakh.

– Out of this, over Rs. 12 lakh is already getting invested.

– But ETF investments need correction.

– Insurance premiums are not efficient investments.

– This surplus should be directed wisely.

? Insurance Policies Assessment

– You hold SBI Life, ICICI Pru Life and LIC money-back.

– These are investment-cum-insurance policies.

– Such plans offer poor returns, often below 5-6%.

– They mix insurance and investment in one.

– Not suitable for long-term wealth creation.

– Only ULIP, endowment or money-back are structured this way.

– You are paying Rs. 1.9 lakh per year on these.

– This must be surrendered immediately and switched to mutual funds.

– Keep only a pure term insurance policy for protection.

– Buy it for Rs. 1 crore or more. Keep it till age 60 or 65.

? ETF Investment Analysis

– You are investing Rs. 55K/month in ETFs.

– ETFs are index-based funds. They don’t beat the market.

– They copy an index like Nifty or Sensex.

– In India, index-based investing has many limits.

– ETFs offer no risk control. No fund manager skill.

– When markets fall, ETFs fall fully.

– You are exposed to high volatility.

– You miss active risk management.

– Active mutual funds perform better in India.

– They offer higher alpha and better downside protection.

– Shift the full Rs. 55K/month ETF SIP into actively managed mutual funds.

– Choose regular plans. Work with a Certified Financial Planner.

? Direct vs Regular Funds Clarification

– You may be using direct funds to save expense ratio.

– But direct funds give no advice, no portfolio review.

– You may miss timely rebalancing and exit strategies.

– Regular funds via an MFD with CFP support give full service.

– They review goals, risks and asset allocation.

– They suggest proper changes during market ups and downs.

– This adds more value than the small cost saving of direct funds.

– It gives better peace of mind and real guidance.

? Monthly Investment Plan (Revised)

– Rs. 45K/month in actively managed mutual funds – Continue.

– Rs. 55K/month in ETF – Stop and switch to active mutual funds.

– Rs. 72K/month EPF contribution – Continue, no change needed.

– Rs. 1.9 lakh yearly in life insurance – Exit and reinvest in mutual funds.

– This will free nearly Rs. 15K/month from insurance policies.

– Reinvest that amount in SIPs.

– Your total monthly MF SIP will become Rs. 1.15 lakh.

? Future Asset Growth Projection

– EPF will keep compounding. At 8% return, corpus may cross Rs. 2.25 crore.

– Mutual funds will grow if SIP is increased to Rs. 1.15 lakh/month.

– Over 11 years, this can grow to Rs. 2.75 crore or more.

– Stocks may grow too. But must be tracked actively.

– NPS will also grow. Rs. 11 lakh today can grow to Rs. 30 lakh or more.

– Together, your retirement corpus can reach Rs. 5.5 to Rs. 6 crore by age 55.

? Retirement Goal Evaluation

– You need Rs. 2 lakh/month after age 55.

– That is Rs. 24 lakh/year.

– Your post-retirement lifespan could be 30 years.

– You need a large enough corpus to sustain that.

– Rs. 6 crore corpus can support Rs. 2 lakh/month with proper plan.

– But the investment after retirement must be done wisely.

– You need growth + safety + liquidity.

– Hence a structured withdrawal plan is needed.

? Post-Retirement Strategy

– Do not put full retirement corpus in bank deposits.

– That will erode wealth due to inflation.

– Use a bucket strategy.

Bucket 1 – 3 years expenses in low-risk instruments

Bucket 2 – 5 to 7 years in hybrid funds

Bucket 3 – Long-term in equity mutual funds

– Withdraw monthly income from Bucket 1.

– Refill Bucket 1 every 2-3 years from Bucket 2 and 3.

– This keeps capital growing and withdrawals safe.

– Review once a year. Take help from a Certified Financial Planner.

? Tax Angle to Plan

– EPF withdrawals after age 55 are tax-free. That’s an advantage.

– NPS gives 60% tax-free and 40% must be used to buy annuity.

– But do not buy annuity. Withdraw NPS at 60% and avoid fresh contributions now.

– Mutual fund redemptions will attract capital gains tax.

– Equity MF LTCG above Rs. 1.25 lakh is taxed at 12.5%.

– STCG is taxed at 20%.

– Debt MF taxed as per income slab.

– Proper withdrawal strategy can reduce tax outgo.

– Keep annual capital gains under exemption limits where possible.

? Emergency and Risk Management

– Maintain Rs. 6 to 9 lakh in emergency funds.

– Park this in short-term debt mutual funds or sweep-in accounts.

– Review health insurance coverage.

– Buy family floater plan if company cover is not enough.

– Have personal health cover for spouse and child.

– Keep nomination updated in all accounts.

– Write a basic Will. It avoids future legal issues.

? Child’s Education and Other Goals

– You mentioned school fees now.

– Plan for higher education cost 8 to 10 years later.

– Start a separate SIP for child’s education.

– Keep this separate from retirement corpus.

– Allocate to hybrid or flexi-cap funds.

– Withdraw gradually near goal to avoid market shocks.

? Asset Allocation Suggested

– EPF – Conservative and steady.

– Mutual funds – Main long-term wealth engine.

– Stocks – Only if managed actively. Or exit and shift to mutual funds.

– NPS – Secondary role. Not flexible post-retirement.

– Insurance – Not an investment. Surrender and reinvest.

– Real estate – You did not mention it. That is fine.

– Do not invest in property. Liquidity and return is poor.

? Final Insights

– You are already investing well. Just a few corrections needed.

– Exit poor-return insurance policies.

– Stop ETFs. Shift to active mutual funds.

– Increase monthly SIPs after insurance exit.

– Keep EPF going. It builds a strong fixed income base.

– Review stocks. Keep only if you can monitor them.

– Have a withdrawal plan post-retirement using the bucket strategy.

– Take help from a Certified Financial Planner for strategy and review.

– Keep investing consistently. Don’t stop SIPs during market falls.

– Avoid frequent fund switching. Focus on goal-linked planning.

– Rs. 2 lakh/month goal is realistic if you follow this strategy.

– With smart action, you can retire with full confidence at 55.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment