Sir, Myself Rajesh, salaried person, 37 years old. having MF SIP Rs. 36500 per month, current invested amount is about Rs. 14,00,000/- + in Equity stocks- Rs.3,00,000/- have about Rs. 5,00,000/- in hand to invest either in stocks or MF . Have family of 3 people and Monthly expenses are around Rs.25k. Planning to take retirement in another 10 years, looking at the current investment can you help me identify approx. corpus required to invest and take retirement. Thank you.

Ans: To achieve your retirement goal of a monthly pension of Rs 2 lakhs post-tax, growing at 7% annually, you'll need to calculate the required corpus. For this, I’m unable to let you know your exact corpus amount since I have no information about your current expenses, risk tolerance, life expectancy and other financial goals.

With assumptions like an 85-year life expectancy and an aggressive risk profile, you might need around Rs 7.75 crore at retirement (age 45). This considers a 7% inflation rate and 13% pre-retirement returns.

Right now, you have Rs 67 lakhs saved, split between equity and debt. However, solely relying on these might only sustain your desired lifestyle till age 60 only. To make sure you have enough until 85, you need to invest an additional monthly investment (SIP) of around Rs 1 Lakh along with your existing investments of Rs. 67 Lakhs. Also, slowly build up an emergency fund equal to 6 months of your expenses.

The response to your query is based on limited information and consulting a financial advisor is highly recommended. He/she can create a personalized plan considering your expenses, risk tolerance, and other goals. There are some free financial calculators (for retirement planning) available on google, you can also refer to the same for the calculation.

Ans: To retire at 45 with a monthly pension of 2 lakhs post-tax, increasing at 7% annually, you need to estimate your post-retirement expenses and calculate the corpus required to generate this income. Assuming a conservative withdrawal rate of 4% annually to sustain the pension without depleting the corpus, you'll need a corpus of approximately 6 crores at the time of retirement.

Here's how you can plan your investments to reach this goal:

Equities: Since you have a long investment horizon and a higher risk tolerance, allocate a significant portion of your investments to equities. Continue investing in stocks and mutual funds with an expected return of 12-15% annually. Increase your SIP in mutual funds to expedite wealth accumulation.
Fixed Income: Maintain a balanced portfolio by diversifying into fixed-income instruments like PF, PPF, govt. bonds, and NPS. Although these instruments offer lower returns, they provide stability and reduce overall portfolio risk. Maximize contributions to NPS, which offers tax benefits and potentially higher returns.
Emergency Fund: Keep your emergency fund intact to cover unexpected expenses and avoid liquidating long-term investments prematurely.
Regular Review: Periodically review your investment portfolio and make adjustments based on changing financial goals, market conditions, and risk appetite. Consider consulting with a financial advisor or planner to optimize your investment strategy and ensure alignment with your retirement objectives.
By consistently investing in a diversified portfolio of equities and fixed-income instruments, you can work towards building a sufficient corpus to achieve your retirement goals. Remember to stay disciplined, stay invested for the long term, and periodically reassess your financial plan to stay on track.

Ans: Hello;

You may buy an immediate annuity for your corpus of 6 Cr, from a life insurance company.

At 6% annuity rate, you may expect a monthly income of 2.1 L(post tax).

Top-up annuity corpus by 75 L after 10 years each to account for inflation.

The annuity may be held jointly with return of purchase price to your nominee.

This is the optimal solution for your pension need at this stage, in my view.

Please buy adequate healthcare insurance for yourself and your spouse.

Best wishes;