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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 31, 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

Asked by Anonymous - May 31, 2025

Sir, I am 57 years old and working in a private company with salary of Rs.81,000/month. I have purchased three Max life life gain-20 policy insurances each with Rs. 50000 premiums for 6 years pay (Total Rs.9 Lakhs) (2012-2018). Purchased policy of one-time lumpsum LIC Jeevan shanti pension plan for Rs.10 Lakhs and the 1st annuity payment of Rs. 10,054/month starts from year 2029. Also invested Rs. 8 Lakhs in Post office pension plan of 5 years which I am continuing it every 5 years where i get nearly Rs.5000/month. I have one more Max life guaranteed monthly income plan of 6 pay premium of 1,15,458/year which is completed in 2018 and started getting pension for first five years Rs.5000/month and then from 6th year getting Rs.9400/month pension. It will end in 2029. Now I have purchased in HDFC Guaranteed Pension Plan for Rs. 10 Lakhs for 5 five years with premium of Rs.2 Lakhs per year where I have paid 1st premium in 2024. This will give annuity of Rs. 94,599/year i.e, Rs.7883/month after 6 years (year 2029 onwards). I have FDs of Rs. 21 Lakhs which I am renewing it every year which I cannot touch as it is meant for my 2 children. My monthly expenditure is Rs.35,000 since I am staying small city. Please suggest me how can I manage to get a monthly pension of Rs. 40,000 when I quit the job at the age 61 (year 2029). Thank you

Ans: You have made many thoughtful financial decisions. Let us now work together to align your investments to ensure a regular income of Rs. 40,000 per month from age 61 (year 2029).

Here is a 360-degree detailed plan structured under clear sub-headings, as per your request.

1. Understanding Your Current Situation

Your age is 57. You have 4 more working years.

Your current income is Rs. 81,000 per month.

Your monthly expenses are Rs. 35,000. You are financially disciplined.

You already have pension sources planned post-2029.

You do not want to touch your Rs. 21 lakh FD corpus. It is for your children.

Your goal is to generate Rs. 40,000/month from age 61. You seek certainty and consistency.

You have invested in both insurance and pension products. Most are non-market linked.

2. Summary of Pension Flows from 2029

Let’s break down what income you are expected to receive starting 2029:

LIC annuity: Rs. 10,054 per month

Post Office pension: Rs. 5,000 per month (if continued)

Max Life Guaranteed Monthly Income Plan: Rs. 9,400 per month (till 2029, so not helpful after)

HDFC Pension Plan: Rs. 7,883 per month

Total confirmed pension starting 2029: Rs. 22,937 per month

Gap to reach Rs. 40,000 per month: Rs. 17,000 approx.

So, we need to plan how to fill this Rs. 17,000 shortfall.

3. Insurance Policies Review

You have 3 traditional Max Life Life Gain-20 plans. Total premium: Rs. 9 lakhs.

These are low return, low flexibility products.

They are mostly insurance-cum-investment products.

Such plans yield 4% to 5% returns over long term. Not ideal for income generation.

Suggestion: You have already completed all premiums. It is not advisable to surrender them now. You can wait for maturity. Then, reinvest maturity amount in mutual funds for monthly income.

4. Gaps in Income from 2029

Let us now build strategy to generate extra Rs. 17,000 per month post 2029.

You have 4 more years before retirement. These are crucial for wealth building.

Let us identify available surplus each month. Your income is Rs. 81,000. Expenses are Rs. 35,000.

That gives you Rs. 46,000 monthly surplus.

From this, set aside some amount for emergency fund and health cover.

You can still invest Rs. 30,000 per month comfortably.

This amount can be channelised into high-growth investments.

5. Investment Strategy Before Retirement

The focus is to build an income-generating portfolio.

Allocate Rs. 30,000 per month into equity mutual funds.

Prefer actively managed mutual funds. Avoid index funds. Index funds are average performers.

Actively managed funds give flexibility and can outperform index. Especially with expert guidance.

Invest through regular plans with support of a Mutual Fund Distributor who is also a Certified Financial Planner.

Regular plans offer ongoing tracking and guidance. Direct funds lack personalised service.

At this age, you need guidance more than saving few rupees on commissions.

Use combination of Large Cap, Flexi Cap and Balanced Advantage Funds.

These funds suit your risk profile and retirement timeline.

Continue SIPs till 2029. Build corpus.

From 2029, use SWP (Systematic Withdrawal Plan) for monthly income.

This can generate the extra Rs. 17,000 you need.

6. SWP Strategy for Post-Retirement Income

SWP (Systematic Withdrawal Plan) is ideal for retirement income.

You can redeem small fixed amounts monthly.

Your money remains invested and continues to grow.

This provides regular income + capital appreciation.

SWP is more tax-efficient than interest income.

With mutual fund taxation, long-term capital gains up to Rs. 1.25 lakh is tax-free.

Above this limit, taxed at only 12.5%.

Plan withdrawals in such a way to remain tax-efficient.

This gives much better returns than traditional pension plans.

7. FDs for Children – Do Not Touch

You have Rs. 21 lakhs in FDs for children. This is a wise allocation.

Do not disturb this amount.

Just keep renewing annually.

If needed, reinvest maturity into debt mutual funds for better returns.

But ensure the capital remains safe.

8. Other Points to Consider

Review health insurance. Ensure Rs. 10 lakh individual health cover.

Also have Rs. 25 lakh family floater cover if dependents exist.

Medical costs rise faster than inflation. Health cover is crucial.

Keep emergency fund of Rs. 2 lakhs in savings account or liquid funds.

Avoid new insurance policies. Focus on wealth creation, not insurance.

Avoid annuity products. They offer low returns and lack flexibility.

Annuities are taxed fully. Mutual funds are more tax-friendly.

9. Timeline and Action Plan

From 2025 to 2029:

Invest Rs. 30,000 per month in mutual funds.

Review portfolio every 6 months with Certified Financial Planner.

Avoid investing in new endowment or pension plans.

Build corpus of at least Rs. 22 lakhs to generate Rs. 17,000 monthly post 2029.

From 2029 onwards:

Use pension income from LIC, Post Office, HDFC plan.

Use SWP from mutual fund corpus to get additional Rs. 17,000 per month.

Review income annually. Adjust SWP amount as per inflation.

10. Asset Allocation Recommendation

Ideal mix for your age and goals:

50% Equity Mutual Funds (growth + income via SWP)

30% Pension sources (LIC, HDFC, PO schemes)

20% Emergency and FD funds (untouched)

11. Retirement Income Taxation Insight

Annuity income is fully taxable.

SWP income is tax-efficient. Long term capital gains up to Rs. 1.25 lakh is tax-free.

Income from mutual funds can be managed to stay within tax slabs.

FDs also fully taxable. Use cautiously.

12. Final Insights

You are on the right track. You have created solid pension base.

Only gap is Rs. 17,000 per month from 2029.

This gap can be filled by building equity mutual fund portfolio in next 4 years.

Mutual funds offer growth, flexibility and tax-efficiency.

Avoid further insurance products. They are not meant for income generation.

Track expenses post retirement. Adjust lifestyle if needed.

Review investments annually with Certified Financial Planner.

Do not go for risky products or unregulated schemes.

Stay disciplined. Follow the plan. You will reach your goal peacefully.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

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

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