How Much Monthly Income Will Be Comfortable in 2030: 1 Daughter, Own House, Tier-2 City?

Ans: With a corpus of around 3.4 Cr, you can expect a monthly income based on a conservative withdrawal rate to preserve the principal. A common strategy is to withdraw 3-4% annually, translating to approximately 28,000 to 37,000 per month. However, market fluctuations and inflation can impact this income over time. Think of your corpus as a tree that provides shade and fruit; nurturing it wisely will help sustain a comfortable and steady income stream. Regular reviews with a financial advisor will ensure your income keeps pace with your needs.

Ans: Current Financial Snapshot
Age: 44 years

Monthly Income: Rs 2 lakh

Monthly Expenses: Rs 1.25 lakh

Savings:

FD: Rs 15 lakh
RD: Rs 20,000 monthly
Mutual Fund SIP: Rs 40,000 monthly (Total: Rs 30 lakh)
Lump Sum Investments: Rs 7 lakh
Stocks: Rs 5 lakh
PPF: Rs 3 lakh
Goals:

Retirement Age: 50 years (2030)
Child's Future: Consider future education and marriage expenses
Corpus Required for Comfortable Retirement
Estimating Retirement Corpus
1. Monthly Expenses Post-Retirement:

Current Expenses: Rs 1.25 lakh per month
Assumed Inflation Rate: 6% per annum
Expenses at Retirement: Rs 1.76 lakh per month (approx.)
2. Corpus Calculation:

Retirement Period: Assume life expectancy of 85 years (35 years post-retirement)
Required Corpus: The corpus should be able to generate Rs 1.76 lakh per month (inflation-adjusted) for 35 years.
Steps to Calculate Corpus
Annual Expenses Post-Retirement:

Rs 1.76 lakh * 12 = Rs 21.12 lakh
Future Value of Annual Expenses:

Adjust for inflation over 35 years.
Corpus Required:

Use retirement calculators to determine exact corpus.
Investment Strategy to Achieve the Corpus
1. Continue and Increase SIPs:

Current SIP: Rs 40,000 monthly
Increase SIP Amount: Gradually increase SIPs with salary hikes.
Equity Focus: Prioritize equity mutual funds for higher returns.
2. Maximize PPF Contributions:

Current PPF: Rs 3 lakh
Maximize Contributions: Contribute Rs 1.5 lakh per year to PPF for tax-free returns.
3. Lump Sum Investments:

Current Lump Sum: Rs 7 lakh
Future Investments: Allocate additional lump sums into diversified mutual funds.
4. Stock Investments:

Current Stocks: Rs 5 lakh
Diversification: Ensure a diversified stock portfolio to reduce risk.
5. Fixed Deposits and Recurring Deposits:

Current FD: Rs 15 lakh
Current RD: Rs 20,000 monthly
Reallocate Funds: Gradually shift FD and RD funds into higher-yield investments like mutual funds.
Child's Future Planning
1. Education Fund:

Estimate Costs: Plan for higher education costs, considering inflation.
Dedicated SIP: Start a dedicated SIP for child’s education.
2. Marriage Fund:

Estimate Costs: Plan for marriage expenses.
Long-Term SIP: Start a long-term SIP for marriage.
Final Insights
1. Regularly Review Investments:

Annual Review: Monitor and adjust your investments annually.
Consult CFP: Seek advice from a Certified Financial Planner for tailored guidance.
2. Tax Planning:

Maximize Deductions: Utilize available tax deductions to optimize savings.
Diversify: Ensure investments are tax-efficient.
3. Emergency Fund:

Maintain Liquidity: Keep an emergency fund equal to 6 months of expenses.
Easily Accessible: Ensure it is easily accessible.
4. Health Insurance:

Adequate Coverage: Ensure adequate health insurance coverage for you and your family.
5. Retirement Planning:

Sustainability: Ensure your retirement corpus is sustainable for at least 35 years.
Inflation-Proof: Plan for inflation-adjusted expenses.
By following these steps, you can aim to build a robust retirement corpus and secure a comfortable life in Chandigarh post-retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Your current earnings of 70K per month if adjusted for inflation(6% assumed)10 years would be 1.25 L.

Assuming you will need 70% of that inflation adjusted value to cover your regular expenses in retirement so your monthly payout requirement will be 70% of 1.25 L=87.5K
A sip of 25 K for 10 years will yield you a corpus of 61.67 L.
A 6% annuity will yield you a monthly income of 30.8K.
If you have corpus available through other sources like EPF, PPF upto 1.13 Cr after 10 years then NO issue the current sip will suffice. (113+61.67=174.67)
A 6% annuity of 1.7467 Cr will yield you monthly payout of around 87.5K
Else you may need to do a sip of 32K for 15 years to reach targetted corpus.
It can be achieved in 10 years too but the sip amount comes to 71K more then your monthly income of 70K hence redundant. (All sip returns are assumed from an equity fund at a modest rate of 13%)

The LIC policy maturity proceeds can be used to purchase the flat as desired.

However more important goals before retirement are the education funding requirement for your children.

I hope you have made provisions towards the same.

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing

If you need any further clarity, kindly revert.

Happy Investing!!

Ans: Hello;

You may initiate a monthly sip of 45 K for 16 years for your retirement planning. It may grow into a sum of 2.62 Cr assuming modest return of 12%.

Also do a monthly sip of 20 K(12 years) and 10 K(17 years) for the higher education goal of your kids. Both may grow into sums of around 65 L each so as to safeguard higher education of your kids.

The retirement corpus may be used buy an immediate annuity which may provide monthly income of 1 L+ post tax.

NPS may used to boost retirement income at 60.

All sips are considered in pure equity mutual funds.

Retirement in 12 years looks difficult.

Happy Investing;
X: @mars_invest