Sir, I am 58 years old and will be retiring from service after two years. I will be having PF contributions of 1 crore at the time of retirement. I have an investment of 50 lakh in MF, stocks and FDs as of now and 10 lakh in PPF and NPS. I am expected to receive a PF pension of Rs. 60000 per month after my retirement and retirement benefits of totalling 30 to 40 lakhs including gratuity. I have a housing loan balance of 15 lakh.My wife and I entitled to get medical benefits from my company. My two sons are employed however second may need a sum of 50 lakh after two years if he prefer to go to abroad for higher studies. I have constructed a house for living after retirement and a flat in my name where I am currently staying. I need a retirement plan for a monthly income of 1.25 lakh per month after retirement. Thank you.

Ans: Dear Prem,

Congratulations on reaching this significant milestone in your life. Retirement is a time to enjoy the fruits of your labor and ensure financial stability. You have a substantial portfolio, and with careful planning, you can achieve your goal of a Rs. 1.5 lakh monthly pension. Here’s a step-by-step guide to help you plan ahead.

Assessing Your Current Financial Position
You have a well-diversified portfolio:

NPS: Rs. 55 lakh
Fixed Deposit: Rs. 1.2 crore
PPF: Rs. 15 lakh
Mutual Funds: Rs. 35 lakh
This gives you a total corpus of Rs. 2.25 crore.

Step 1: Evaluate Your Monthly Expenses and Goals
Before we plan the investment, it’s crucial to understand your monthly expenses and financial goals.

Monthly Pension Requirement: Rs. 1.5 lakh
Other Goals: Healthcare, travel, and emergencies
Step 2: Creating an Income Stream
Systematic Withdrawal Plan (SWP)
SWP from mutual funds can provide a regular income while keeping your investment growing. Here’s how it works:

Select the Mutual Funds: Choose funds that have a good track record and match your risk profile.
Set the Withdrawal Amount: Decide on a fixed amount to withdraw monthly.
Benefit: This method allows you to get regular income while the remaining funds continue to grow.
Annuity from NPS
NPS offers an annuity option, which can provide a steady income. You can allocate a portion of your NPS corpus to an annuity plan. Here’s how:

Use 40% of NPS Corpus: Use at least 40% of your NPS corpus to buy an annuity.
Choose the Right Annuity Plan: Select an annuity plan that offers a lifetime payout.
Benefits: An annuity ensures a guaranteed monthly income for life.
Fixed Deposit and PPF Interest
Fixed Deposit Interest: The interest from your FD can provide a regular income. Reinvest the principal amount at maturity to continue receiving interest.
PPF Withdrawals: After retirement, you can start withdrawing from your PPF account as needed.
Step 3: Allocating Your Corpus
Diversify Your Investments
Debt Instruments: Allocate a portion of your corpus to debt instruments for stable and secure returns. This includes fixed deposits, PPF, and debt mutual funds.
Equity Instruments: To keep up with inflation, maintain a portion in equity mutual funds. This helps in growing your corpus over time.
Example Allocation
Equity Mutual Funds: Rs. 35 lakh (for growth and SWP)
Debt Mutual Funds: Rs. 20 lakh (for stability and SWP)
Fixed Deposits: Rs. 1 crore (for regular interest income)
PPF: Rs. 15 lakh (for secure returns)
NPS Annuity: Rs. 22 lakh (for guaranteed monthly income)
Step 4: Planning for Healthcare and Emergencies
Health Insurance
Ensure you have adequate health insurance to cover medical expenses. This will protect your savings from being depleted due to healthcare costs.

Emergency Fund
Maintain an emergency fund of at least 6-12 months of your expenses. This should be easily accessible and invested in liquid funds or a savings account.

Step 5: Regularly Review and Adjust Your Plan
Your financial needs and market conditions will change over time. Regularly review your investment plan and adjust it as needed. Here’s how:

Annual Reviews: Conduct annual reviews to assess the performance of your investments.
Rebalance Portfolio: Rebalance your portfolio to maintain the desired asset allocation.
Consult a Certified Financial Planner: A CFP can provide personalized advice and help you create a customized roadmap with specific analysis and calculations.
Benefits of Consulting a Certified Financial Planner
A CFP can help you:

Analyze Your Financial Situation: Assess your current financial status and future needs.
Create a Customized Plan: Develop a tailored plan that aligns with your goals.
Monitor and Adjust: Regularly monitor your investments and make adjustments as needed.
Provide Peace of Mind: Ensure that your financial future is secure and well-planned.
Conclusion
By following these steps, you can create a solid financial plan for your retirement. Diversify your investments, utilize SWP and annuities, and regularly review your plan. Consulting a Certified Financial Planner can provide additional guidance and peace of mind.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello Bahuleyan,

Thank you for reaching out for advice on your retirement planning. Given your current financial situation and upcoming expenses, let's outline a plan to help you secure your future.

1. Immediate Financial Needs
Since your son's marriage will require around 9 lakhs from your savings, you will need to prioritize which investments to liquidate:

Liquidate SIPs: Use the SIPs (Systematic Investment Plans) amounting to 5 lakhs.
Utilize One-time Deposit: Use 4 lakhs from your one-time deposit.
This will cover the 9 lakhs required for the wedding.

2. Assess Remaining Savings
Post your son's marriage, you will have the following remaining:

One-time deposit: 1 lakh
NPS (National Pension System): 2.5 lakhs
3. Regular Income and Expenses
Your current salary is ?45,000 per month. Since you have no PF (Provident Fund) savings and minimal other savings, it's crucial to start focusing on building your retirement corpus immediately.

4. Steps to Secure Your Financial Future
A. Continue Working
Since you have the option to continue working beyond 60 years, this will be a key component in your financial planning. Your salary will help cover your living expenses and also contribute towards savings.

B. Create a Monthly Budget
Essential Expenses: Track your monthly essential expenses and ensure they are well within your salary.
Savings and Investments: Allocate a portion of your salary towards savings and investments. Ideally, aim to save at least 20-30% of your income.
C. Rebuild Emergency Fund
Once the wedding expenses are covered, start rebuilding an emergency fund to cover at least 6 months of your living expenses.

D. Increase Retirement Savings
NPS Contributions: Continue contributing to the NPS to take advantage of the tax benefits and the compounding effect.
Recurring Deposits (RD) or Fixed Deposits (FD): Consider opening an RD or FD with a part of your salary for a secure return.
Mutual Funds: After rebuilding your emergency fund, start SIPs in diversified equity mutual funds for long-term growth.
PPF (Public Provident Fund): Open a PPF account for long-term savings with tax benefits.
5. Medical Insurance
Ensure you have adequate health insurance coverage. As you age, medical expenses can be a significant burden, and having insurance can protect your savings.

6. Long-Term Planning
Retirement Corpus Goal: Determine how much you will need per month post-retirement and calculate the corpus required. Given inflation, consider an annual increase in expenses.
Investment Portfolio: Diversify your investments to balance between risk and return. A mix of equity, debt, and fixed income investments can provide stability and growth.
7. Engage in Financial Planning Services
Given the complexity and importance of retirement planning, it might be beneficial to consult with a Certified Financial Planner (CFP) who can provide a personalized and detailed financial plan.

Summary
Post-marriage, reassess your remaining savings and rebuild an emergency fund.
Continue working and save a portion of your income.
Invest in a mix of NPS, mutual funds, PPF, and FDs.
Ensure adequate health insurance coverage.
Consider professional financial advice for detailed planning.
By following these steps, you can work towards securing your financial future despite the immediate expense of your son's marriage. Wishing you all the best in your financial journey and your son's wedding.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in