Respected Guru's, i am 52years old, wanted to retire early, following are my investments, MF - INR 80L, Equity - INR 22L, 3 houses, one is self-occupied, other 2 houses valued at INR 90 L and INR 32L respectively, one shop - INR 50L i have home...

Respected Guru's, i am 52years old, wanted to retire early, following are my investments, MF - INR 80L, Equity - INR 22L, 3 houses, one is self-occupied, other 2 houses valued at INR 90 L and INR 32L respectively, one shop - INR 50L i have home loan outstanding of INR 12L, FD of INR 32L , PF INR 33L, NSC INR 7L, PPF INR 4.5L monthly expenses requirement is INR 1 L, monthly rental income INR 43K kindly help me to plan my early retirement. Thank you in advance for your reply on my question.

Ans: Hello;

Utilise NSC and PPF balance to settle outstanding home loan.

Your MF, Stocks and PF holding add upto 1.35 Cr.

You may buy immediate annuity for this corpus(1.35 Cr) from a life insurance company. Assuming 6% annuity rate you may expect a post tax monthly income of around 60 K.

This when added to rental income of 43 K from your real estate assets will led to a comprehensive monthly income of 1 L+.

The rental income can be hiked to adjust for inflation.

You may retain 5-7 L as emergency fund while balance amount of FD may be used to top-up the annuity income in future.

Do buy good health insurance covering yourself and your family.

Also consider making will to ensure smooth transfer of your wealth to your heirs.

Best wishes;
X: @mars_invest

Ans: You're doing a lot of things right already. You're supporting your family, paying EMIs, saving in provident fund, and holding life insurance. Planning for early retirement is a big goal, especially with two small kids. But with the right approach, it’s possible.

Let’s assess and build a step-by-step plan for you from a Certified Financial Planner perspective. This plan will guide you to aim for financial freedom earlier than usual.

Please read each section carefully.

Your Current Financial Profile – Strong Points

You are earning Rs. 80,000 monthly. That's a good income to start planning early retirement.

You live in your parental house. That saves you rent and increases your savings potential.

You are already contributing Rs. 10,000 monthly to PF. This builds your retirement base slowly.

You have life insurance. This shows care for your family. That's a positive habit.

You are repaying your home loan without fail. Rs. 30,000 EMI shows commitment and discipline.

Your children are just 3 and 7 years old. You have time to prepare for their future.

Your Current Gaps and Areas of Concern

Out of Rs. 80,000 income, Rs. 30,000 goes to EMI. That is a high ratio.

Children’s school fees are Rs. 12,000 monthly. This will only increase over time.

Your insurance investment is a ULIP-type plan. These are not cost-efficient.

Your monthly savings are very limited. This restricts wealth creation.

Retirement planning is not yet started separately. No dedicated retirement corpus exists now.

Action Plan – For Early Retirement and Family Stability

1. Immediate Review of Insurance Plans

You have two ULIP policies. These are not pure investment products.

ULIPs have high charges in the initial years. That eats your returns.

They mix insurance and investment. That weakens both.

Surrender both policies as soon as lock-in ends.

Redirect the full amount and future premiums to mutual funds.

Only keep your term insurance cover of Rs. 75 lakhs.

If your family depends fully on you, increase term insurance to at least Rs. 1.25 crore.

2. Build Emergency Fund First

You must save at least 6 months of total monthly expenses.

Your EMI + Fees + Living = About Rs. 55,000 per month.

So, build an emergency fund of at least Rs. 3.5 lakhs.

Keep this in a liquid mutual fund. Not in savings account.

This will protect your home EMI and children’s fees during emergencies.

3. Home Loan Management

You still owe Rs. 18.2 lakhs with Rs. 30,000 EMI.

Try to prepay some part every year. Even Rs. 1 lakh extra yearly helps.

Prepayment reduces interest and shortens loan tenure.

Use any bonus or refund to do this.

Clear the loan before your child turns 10 years old.

Once the loan is over, redirect EMI money into investment for retirement.

4. Monthly Investment Strategy After EMI

You have very limited investment outside insurance now.

You need to start investing Rs. 10,000 to Rs. 15,000 monthly in mutual funds.

Use regular funds through a trusted MFD along with a Certified Financial Planner.

Direct mutual funds don't offer ongoing support. You might miss future rebalancing.

A CFP will guide you based on life changes, not just past returns.

Invest in a mix of large cap, flexi cap, and balanced advantage funds.

These are actively managed and adapt better in changing markets than index funds.

Index funds lack flexibility. They just follow the market without beating it.

You need performance, not just participation. Actively managed funds offer that.

5. Retirement Corpus Planning

Early retirement means you stop income early. But expenses continue.

Start a separate mutual fund SIP dedicated only for retirement.

Begin with Rs. 5,000 monthly. Increase every year by 10%.

This habit is called SIP step-up. It builds wealth faster.

You can also allocate part of your PF maturity when you resign or retire.

But don't depend fully on PF. That alone is not enough for early retirement.

Target a corpus that covers at least 25-30 years of non-working life.

6. Children’s Education Planning

Education will be expensive. Especially higher education after age 15.

Open two mutual fund folios separately for each child.

Start investing Rs. 2,500 to Rs. 3,000 monthly in each fund.

These should be midcap and balanced funds for long term growth.

Avoid investing through insurance products for education.

Education is a planned goal. So SIP in mutual funds works better.

Review the portfolio every 2 years with a CFP.

7. Improve Cash Flow and Monthly Surplus

Currently, Rs. 30,000 EMI and Rs. 12,000 fees = Rs. 42,000 fixed expense.

After food, transport, other spending, little is left to invest.

Track spending closely. Avoid wasteful purchases.

Use apps or manual diaries to control lifestyle expenses.

Explore part-time freelance income or tax savings if possible.

The more you save monthly, the faster you can retire early.

8. Health Insurance for Entire Family

Term insurance exists. But health insurance is not mentioned.

Buy a family floater health policy of Rs. 10 lakh minimum.

Also, buy a separate Rs. 5 lakh plan for each parent if they are dependent.

Medical inflation is rising fast. Insurance is cheaper now than later.

Health cover will protect your savings from being used for hospital bills.

9. Review and Track Every Year

Sit with a CFP once every 12-18 months.

Review progress towards early retirement and children’s goals.

Adjust SIP amounts, insurance needs, and asset allocation if needed.

Early retirement needs commitment, not just planning.

Life changes. Planning must also change with life.

10. Taxation Awareness for Mutual Funds

New tax rule applies for mutual funds.

For equity mutual funds, LTCG above Rs. 1.25 lakh is taxed at 12.5%.

STCG is taxed at 20%.

Debt mutual funds are taxed as per your tax slab.

Use a mix of funds to balance growth and tax efficiency.

A CFP will structure this properly for you.

Finally

You are taking care of your kids, paying EMI, and still planning retirement. That's inspiring.

Just avoid insurance-based investments. They weaken your wealth growth.

Focus fully on pure investments through mutual funds.

Use term cover for protection. Use SIPs for wealth creation.

Target small increases in savings every year. This will change your future.

Track and review your plan every year. Financial planning is a journey, not one-time work.

You are on the right track. Keep moving with discipline and clarity.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment