I am 58 years old. Currently I have 1.8 cr in mutual fund. 79 lakhs in Equity. 75 laks in PF. 10Lakhs in NPS. 10Lakhs in PPF.
Monthly SIP of 1L. How much corpus I can expect when I retire Jan Jan 2027. I want to have monthly steady income if 2 Lakhs when I retire.
Ans: At 58 years old, you have a diverse portfolio, including:
Mutual Funds: Rs. 1.8 crore
Equity: Rs. 79 lakh
Provident Fund (PF): Rs. 75 lakh
National Pension System (NPS): Rs. 10 lakh
Public Provident Fund (PPF): Rs. 10 lakh
Monthly SIP: Rs. 1 lakh
This well-diversified portfolio provides a strong foundation for your retirement planning.
Estimating the Corpus at Retirement
Given your assets and continued contributions, let's estimate the corpus by January 2027.
Mutual Funds Growth
Your current mutual fund investments of Rs. 1.8 crore, with continued monthly SIP of Rs. 1 lakh for three years, can grow significantly, assuming a reasonable growth rate.
If we consider a conservative growth rate of 10-12% per annum, the corpus could expand to a substantial amount by your retirement.
Equity Growth
The Rs. 79 lakh in direct equity, depending on market conditions and stock selection, could also grow at an average rate of 10-12% per annum.
However, equity investments carry more risk, and the returns can be volatile.
Provident Fund (PF) Growth
The Rs. 75 lakh in your PF account is relatively stable, growing at a rate of around 8-8.5% per annum.
This amount will also compound until your retirement, adding to your retirement corpus.
NPS Growth
The Rs. 10 lakh in NPS will continue to grow, offering tax benefits and a mix of equity and debt exposure.
PPF Growth
The Rs. 10 lakh in PPF will grow at a rate of 7-7.5% per annum, providing a stable, tax-free return.
Total Expected Corpus at Retirement
Considering all these factors, your total corpus by January 2027 could range between Rs. 4-5 crore. This includes growth from mutual funds, equity, PF, NPS, and PPF contributions.
Planning for a Steady Monthly Income of Rs. 2 Lakh
To achieve a monthly income of Rs. 2 lakh post-retirement, you need a robust withdrawal strategy.
Systematic Withdrawal Plan (SWP)
An SWP from your mutual fund investments can provide a steady income.
If you withdraw Rs. 2 lakh per month, that would amount to Rs. 24 lakh annually.
With a well-balanced portfolio, a withdrawal rate of 5-6% is considered safe to avoid depleting your corpus.
Annuity Consideration
While not the first recommendation, you could consider converting a portion of your corpus into an annuity.
Annuities offer a guaranteed monthly income, but they usually offer lower returns and less flexibility compared to mutual funds.
Managing Your Portfolio for Retirement
Balanced Approach: As you approach retirement, consider shifting a portion of your equity investments to more stable debt instruments to reduce risk.
Diversification: Keep your portfolio diversified across various asset classes to manage risk and ensure steady returns.
Regular Review: Continuously review your portfolio's performance and make adjustments as needed, considering changes in market conditions and personal circumstances.
Final Insights
By maintaining a disciplined approach and sticking to your financial plan, you can achieve your retirement goals. A diversified portfolio, coupled with a well-planned withdrawal strategy, can provide the steady income you seek.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in