Hi Dev, I hope you're doing well. I have a question that I think you might be able to assist me with. I'm 52 years old and currently need to plan for my children's education expenses. My elder child's education is ongoing and requires 10 lakhs, while my younger child will require 30 lakhs in two years. Here's a breakdown of my investments: Stocks, Mutual Funds, and Portfolio Management Services amount to 2.6 crores, and I have 40 lakhs in my Provident Fund. I also receive a monthly rent of 2 lakhs. If I estimate my monthly expenses at 1 lakh, do you think I can retire comfortably with this corpus? In the worst-case scenario, I can liquidate one of my properties, which could yield 3 crores. Ideally, I would like to retire without touching my real estate investments. My life expectancy is 85 years. Additionally, I have medical insurance coverage of 12 lakhs plus a top-up of 90 lakhs. I plan to travel twice a year during retirement, with an estimated expenditure of 1.5-2 lakhs per year. I would appreciate your insights on this matter. Thank you, Geo

Ans: Hello Geo, I'm doing well, thank you for asking. It sounds like you have several factors to consider in your retirement planning, especially regarding your children's education expenses and your retirement goals.

With your investments totaling 2.6 crores in stocks, mutual funds, and portfolio management services, along with 40 lakhs in your Provident Fund and a monthly rent of 2 lakhs, you seem to have built a substantial corpus for retirement. Additionally, having the option to liquidate one of your properties for 3 crores provides flexibility in case of unforeseen circumstances.

Considering your monthly expenses of 1 lakh, your retirement income from investments and rental income should comfortably cover your basic needs. Your medical insurance coverage also seems robust, which is crucial for maintaining financial security during retirement.

However, it's essential to account for inflation and potential fluctuations in investment returns. While your current investments may suffice for your retirement needs, periodic reassessment and adjustments may be necessary to ensure your financial security throughout retirement.

Regarding your children's education expenses, it's commendable that you've earmarked funds for their education. By carefully planning the timing and allocation of these expenses, you can minimize the impact on your retirement corpus.

Your estimated travel expenses during retirement are reasonable and can be accommodated within your budget.

Overall, with prudent financial management and careful planning, it seems feasible for you to retire comfortably without touching your real estate investments. However, consulting with a Certified Financial Planner can provide personalized insights and recommendations tailored to your specific financial situation and goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Firstly, it's heartening to see your foresight in planning for your children's education and thinking ahead towards retirement. Your financial situation seems quite robust, and you've made commendable progress with your investments.

Let's delve into your retirement planning. With a corpus of 2.6 crores in stocks, mutual funds, and Portfolio Management Services, along with 40 lakhs in Provident Fund, you have a substantial base. Adding your monthly rent of 2 lakhs and estimating monthly expenses at 1 lakh, your current financial position appears promising.

Considering your monthly rental income and your expenses, you seem to have a surplus that could be redirected towards your children's education and retirement corpus. However, it's essential to factor in inflation and potential market fluctuations.

Your medical insurance coverage looks solid, providing a safety net for unforeseen medical expenses. Moreover, your travel plans are well within reach, considering your retirement aspirations.

Given your life expectancy of 85 years, you'll need to ensure that your corpus lasts throughout your retired life. With prudent planning and regular reviews, it's possible to achieve a comfortable retirement without liquidating your real estate investments.

Here are some suggestions:

Education Corpus: Allocate funds specifically for your children's education to ensure timely payments.
Retirement Corpus: Continue to invest and diversify your portfolio to beat inflation and safeguard against market volatility.
Real Estate: If possible, retain your properties as a safety net or as a source of passive income.
It would be beneficial to have a detailed one-on-one discussion with a certified financial planner to create a tailored financial roadmap for you. You can explore various scenarios, optimize your investment strategy, and ensure you retire comfortably without compromising on your aspirations. Please feel free to reach out to me for any follow-up questions.

Ans: Hi,

Current state of your finances
Liquid Corpus - 3 Cr
Savings FD - 45 lakhs
Rent income - 37000

Monthly expenses - 1.5 lakhs

If we consider the above, then the monthly expenses will be covered for about 35 years (assuming inflation of 5-6% and average returns of 8%). This doesn't include the education expenses for your 2 children.

Retirement is now typically planned for up to age of 85 years (i.e. 43 years for you). Hence in your situation you have a challenge to support monthly expenses for retirement and children education.

You have 2 more houses and without knowing your intent for their usage/sale and their value it becomes difficult to indicate if they would be sufficient to support the 2 major goals you have listed.
Also with current lifestyle and medical expenses, the health insurance of 20 lakhs may need to be ramped up to a much higher amount.
Also you have not shared much details of your Insurance policies to understand if they are the appropriate ones and if the risk cover is sufficient.

Another important aspect to consider for early retirement is - how will you keep yourself occupied. You will have a lot of time on hand and do you plan to monetize your time by engaging in some financially rewarding activities. This will also have an impact on the overall state of your well-being - financially and psychologically.

I would highly recommend that you consult with a CFP who can guide you with a well defined Financial plan, this will include all your requirements and provide you with options and alternatives. You will need to have a plan of investment that meets your goals, plan risk covers for securing future of your family (Life and health) and consider tax implications of investing and subsequent utilization of the corpus for goals. So its an elaborate plan that will be personalized for you which will help you understand the right time for retirement and what to expect pre and post retirement.

Thanks & Regards
Janak Patel
Certified Financial Planner.