Hello sir. I am 46 have plan to retire in 6 months. Current expenditure 90k including child education two kids with 13 years and 7 years. I have 1 cr fund fd+ 1 cr epf + 30lakh in ppf + 70 lakh in mf. I am expecting every year 3 to 4 lakh as travel additional expense. I need to take care my parents both 70 and 80 age. I have 2 cr asset house. Let me know how much more fund required and how to manage this fund till next 35 years.

Ans: You are currently 51 and plan to retire at 60. You have accumulated Rs. 17 lakh in mutual funds, Rs. 14 lakh in EPF, and Rs. 13 lakh in PPF. You are maximizing your PPF contribution at Rs. 1.5 lakh annually and investing Rs. 31,000 monthly in SIPs, planning to increase your SIP by Rs. 4,000 per year until retirement. Let’s analyze how these contributions can grow over the next nine years and how to prepare for retirement.

Estimating Your PPF Balance at Age 60
Your current PPF balance is Rs. 13 lakh, and you plan to continue contributing Rs. 1.5 lakh annually. The PPF interest rate is variable, but let’s assume an average rate of 7.1% per annum for the purpose of this estimate.

Yearly Contribution: Rs. 1.5 lakh
The compound interest on your contributions will significantly boost your PPF corpus over the next nine years. With the power of compounding, your PPF balance at age 60 could grow substantially.

Estimating Your Mutual Fund Portfolio at Age 60
You have Rs. 17 lakh in mutual funds and are contributing Rs. 31,000 per month, planning to increase your SIP by Rs. 4,000 annually. Let’s assume a conservative annual return of 12% from your mutual funds.

Current Monthly SIP: Rs. 31,000
Annual SIP Increment: Rs. 4,000
With these contributions and assumed returns, your mutual fund portfolio could grow significantly by the time you reach 60.

Inflation Impact on Your Monthly Expenses
Your current monthly expenses are Rs. 35,000. Inflation will erode the purchasing power of money over time, so it’s essential to adjust your future expenses for inflation. Let’s assume an average inflation rate of 6% per annum.

Current Monthly Expenses: Rs. 35,000
Inflation Rate: 6% per annum
By the time you reach 60, your monthly expenses will likely increase due to inflation. This increase will impact how much you need in retirement savings to maintain your current lifestyle.

Estimating the Required Corpus for Post-Retirement
To maintain your lifestyle post-retirement, you need to ensure that your retirement corpus can generate sufficient returns to cover your expenses. Given your current expenses and expected inflation, you’ll need to calculate how much corpus is required to generate a sustainable income.

Required Monthly Income at Retirement: Adjusted for inflation
Safe Withdrawal Rate: Typically 4% per annum
Based on these assumptions, you can determine the corpus needed to support your retirement expenses.

Recommended Investment Strategy
Given your current financial status and retirement goals, it’s essential to diversify your investments to manage risk while ensuring growth.

Continue with SIPs in Mutual Funds
Diversification: Invest in a mix of large-cap, mid-cap, and multi-cap funds. These funds provide growth potential while balancing risk.
Regular Monitoring: Regularly review your portfolio and make adjustments based on market conditions and your financial goals.
Maximize PPF Contributions
Tax Benefits: PPF contributions provide tax benefits under Section 80C, which reduces your taxable income.
Safe and Secure: PPF is a safe investment with a guaranteed return, making it a reliable component of your retirement plan.
Consider a Retirement-Oriented Investment Plan
Balanced Fund Allocation: As you approach retirement, consider shifting some investments to more conservative options, such as balanced or hybrid funds, which combine equity and debt.
Systematic Withdrawal Plan (SWP): Upon retirement, consider using SWPs from your mutual funds to generate a regular income while keeping the rest of your investments growing.
Final Insights
Planning for retirement involves estimating future expenses, building a sufficient corpus, and investing wisely. Given your current savings and investment strategy, you’re on the right track. However, it’s crucial to regularly review and adjust your investments to align with your goals and market conditions.

Estimate Future Expenses: Regularly revisit your expense projections and adjust for any changes in your lifestyle or inflation.
Stay Disciplined: Continue your SIPs and PPF contributions to build a solid retirement corpus.
Review Regularly: Ensure your investment portfolio remains aligned with your retirement goals, making adjustments as needed.
By following these steps, you can work towards a comfortable and financially secure retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in