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Ramalingam Kalirajan  |8203 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 13, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - May 01, 2024Hindi
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I want to retire next year i m 45. My current corpus 15 lac mf , 50 lac fd , 10 lac plot , 24 lac bond & ncd , own house. No liabilities. Monthly expenses 22k. Can i retire

Ans: With a comprehensive portfolio and no liabilities, you're in a favorable position to consider retirement at 45. Let's assess your financial readiness to retire next year based on your current assets and expenses:

Existing Corpus:

Mutual Funds: Rs 15 lakh
Fixed Deposits: Rs 50 lakh
Plot: Rs 10 lakh
Bonds & NCDs: Rs 24 lakh
Own House: Value not specified
Monthly Expenses:

Your monthly expenses amount to Rs 22,000.
Given these figures, let's analyze your retirement prospects:

Sustainable Income:

Calculate the annual income generated from your existing corpus (mutual funds, fixed deposits, bonds & NCDs). Consider average returns and tax implications.
Ensure that the income generated from your investments is sufficient to cover your monthly expenses of Rs 22,000 and any additional retirement expenses.
Evaluate Future Expenses:

Anticipate any changes in your expenses post-retirement. Consider factors like healthcare costs, travel, and leisure activities.
Ensure that your retirement corpus can support these potential expenses and provide a comfortable lifestyle throughout your retirement years.
Emergency Fund:

Maintain an emergency fund equivalent to at least 6-12 months of your living expenses. This fund should be easily accessible and set aside for unexpected expenses or emergencies.
Consideration of Inflation:

Factor in the impact of inflation on your expenses and investment returns. Ensure that your retirement corpus can keep pace with inflation to maintain your purchasing power over time.
Professional Advice:

Consult with a Certified Financial Planner (CFP) to evaluate your retirement readiness comprehensively.
A CFP can assess your financial situation, retirement goals, and investment strategy to determine if you're adequately prepared for retirement.
Based on the information provided, retiring at 45 appears feasible given your substantial corpus, low expenses, and lack of liabilities. However, it's essential to conduct a thorough analysis, consider potential contingencies, and seek professional advice to ensure a smooth transition into retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |8203 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 04, 2025

Asked by Anonymous - Jan 27, 2025Hindi
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Iam 55 yrs old. I have a corpus of 2cr in equity and mutual fund, 3cr investment in various schemes, own house worth 2.5cr, land worth 50 l, savings about 50 l. Daughter studying abroad almost finishing her study and son studying engineering. Kindly advise if I can retire.
Ans: Your current investment portfolio appears well-diversified. With Rs. 2 crore in equity and mutual funds and Rs. 3 crore in various schemes, you have built a robust base. Additionally, owning a debt-free house worth Rs. 2.5 crore strengthens your financial position. The savings of Rs. 50 lakh offer flexibility for short-term needs.

Supporting your children's education abroad and for engineering studies indicates a thoughtful financial plan. Since your daughter's education is nearing completion, future expenses will likely reduce, freeing up resources.

Retirement Feasibility
Based on your corpus and lifestyle goals, retiring now may be feasible. However, there are a few essential considerations before making the final decision:

Monthly Expenses: Calculate your expected post-retirement monthly expenses, including healthcare and leisure.

Inflation Factor: Your corpus should provide increasing income to combat inflation. A long retirement horizon requires capital preservation alongside regular withdrawals.

Children's Future Expenses: Ensure funds are allocated for your son's remaining education and any assistance for your daughter.

Recommendations
Systematic Withdrawal Plans (SWPs): Allocate part of your mutual fund corpus to SWPs for regular income. This ensures tax-efficient, predictable cash flow post-retirement.

Actively Managed Mutual Funds: Keep a portion of your equity corpus in actively managed funds to benefit from growth opportunities. These funds often outperform passive alternatives like index funds over the long term.

Debt Fund Allocation: Increase exposure to high-quality debt funds. These provide stability and predictable returns, balancing market volatility risks.

Emergency Fund: Maintain Rs. 25-30 lakh as a liquid emergency fund. This safeguards against unforeseen medical expenses or other emergencies.

Insurance and Health Protection
Health Insurance: Opt for comprehensive health insurance, especially for senior citizens, with adequate coverage. Your current financial health may cover premiums.

Life Insurance: Evaluate whether current policies serve any practical purpose now. At this stage, investment-focused insurance like ULIPs or LIC plans are likely inefficient.

Estate Planning
Will Preparation: Draft a clear will to distribute your wealth as per your wishes. This prevents future disputes and ensures smooth inheritance.

Power of Attorney: Consider assigning a trusted family member or advisor as a financial power of attorney.

Education Fund Planning
Allocate a specific portion of your savings to fully cover your son’s education costs.
Any surplus from this earmarked amount can be redirected to investments.
Asset Utilisation Insights
House and Land Ownership: Continue holding these assets if they provide emotional security.

If needed, these can later be liquidated for further income during retirement.

Diversify Savings: Rs. 50 lakh in savings can be strategically split among fixed deposits, debt funds, and liquid mutual funds for steady and safe returns.

Final Insights
With a corpus of Rs. 5 crore and prudent asset allocation, retiring at 55 seems achievable. Focus on maintaining an optimal balance between equity and debt investments to ensure steady growth and income.

By making thoughtful decisions about withdrawals, insurance, and estate planning, you can enjoy a financially secure and fulfilling retirement.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

..Read more

Ramalingam

Ramalingam Kalirajan  |8203 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 07, 2025

Money
Can I retire now, I am running 62 years. Having own house in tier b city. Have 1.20 cr corpus. Only daughter is doing job in IT sector. Have some plots also.
Ans: At age 62, you are already in a good place.

You have no rent to pay. Your daughter is financially independent. You have a Rs. 1.20 crore corpus. You also own some plots. These are all strong positives.

Let’s carefully analyse if you can retire today with peace of mind.

This answer will assess your readiness from every side.

Let us build a complete, step-by-step view of retirement at this stage.

Your Financial Position at Retirement Age
You have your own house. This removes a major living cost.

You have a corpus of Rs. 1.20 crore. This is a decent base.

You live in a tier B city. That reduces monthly cost of living.

Your daughter is working. You do not have dependent responsibilities.

You also own plots. But we will not consider them as active retirement income.

Let Us First Estimate Lifestyle Requirements
At retirement, expenses matter more than income.

Monthly spending must be covered without stress for 25–30 years.

You may live till 85 or even 90. So plan for 25+ years.

Healthcare, inflation, and lifestyle upgrades must be considered.

You must plan for rising costs, even if current costs are low.

Understand Your Monthly Income Need
Let us assume you need Rs. 30,000 to Rs. 40,000 per month now.

This will rise every few years due to inflation.

You must generate rising income from the corpus itself.

Your retirement plan should beat inflation every year.

Assess the Strength of Your Retirement Corpus
Rs. 1.20 crore is a good base if invested wisely.

If managed well, it can generate steady monthly cash flow.

Do not let it sit idle in savings account or low-return instruments.

It must grow, protect capital, and give monthly income together.

Avoid Real Estate as Retirement Income Source
Plots do not give monthly income. They only grow in paper value.

Selling land is not always easy. It can take time and effort.

Legal issues, buyer delays, and distress selling are common.

Do not depend on land for cash flow in retirement.

Consider it only as a backup or future legacy for daughter.

Right Retirement Strategy: Growth + Income + Liquidity
Your Rs. 1.20 crore corpus must be split into 3 key parts.

First part – for monthly income for next 5–7 years.

Second part – for growth to support income after 7–8 years.

Third part – for liquidity, emergencies, and medical needs.

Part 1 – Monthly Income for Immediate Needs
Use 30% to 40% of corpus in debt mutual funds or SWP plans.

These funds provide stable monthly income.

You can set up a Systematic Withdrawal Plan (SWP).

You withdraw Rs. 30,000–35,000 every month from this part.

The base capital remains protected with low-risk instruments.

Part 2 – Growth to Beat Future Inflation
Keep 40% to 45% of corpus in equity mutual funds.

Equity funds give higher returns over long periods.

Use actively managed funds to get better results than index funds.

Actively managed funds adjust to market, sector, and risk conditions.

They are managed by experts with experience in different cycles.

Index funds do not offer flexibility. They follow the market blindly.

In retirement, smart fund management is more useful than passive copying.

Part 3 – Liquidity and Emergency Use
Keep 10% to 15% in liquid or short-term mutual funds.

Also, keep some in bank account for emergencies.

This money can be used for health, travel, or family support.

You must access it without breaking other investments.

Why You Must Avoid Direct Mutual Fund Route
Direct funds may have lower expense, but no professional guidance.

You will not get help during market fall or fund underperformance.

Emotional decisions may reduce your corpus value over time.

Regular plans with MFD-CFP help with monitoring and rebalancing.

They also manage tax impact, fund switches, and risk updates.

In retirement, you need regular check-ins, not trial-and-error.

Medical Expenses Must Be Covered Separately
If you have health insurance, that is good.

If not, take a senior citizen plan with wide hospital network.

Medical inflation is very high. Plan Rs. 5,000–8,000 per month separately.

Keep a separate fund for sudden health events.

Do You Need to Work Part-Time?
If your monthly needs are higher than income, you may work part-time.

This helps for first few years till corpus grows.

Consultancy, teaching, online work are some flexible options.

If you enjoy work, do it for 3–5 years more.

Should You Sell Your Plots Now?
Do not rush to sell plots unless cash is urgently needed.

Let the land stay as reserve. It is not your primary retirement plan.

If you get a good price in future, sell it and reinvest smartly.

Retirement Planning Is Not One-Time
Every year, review your plan with your Certified Financial Planner.

Update your expenses, income, health, and family needs.

Adjust fund allocation based on age, returns, and lifestyle.

Rebalance from equity to debt every 5 years gradually.

How Much Can You Withdraw Each Month Safely?
You can withdraw around Rs. 30,000–35,000 safely now.

As your equity funds grow, increase this by 5% every year.

This way, you cover inflation and protect your capital.

Do not withdraw more than needed in early years.

Tax on Withdrawals – New Rules (2024-25 Onwards)
Equity fund gains above Rs. 1.25 lakh yearly are taxed at 12.5%.

Short-term gains in equity mutual funds are taxed at 20%.

Debt mutual funds are taxed as per your income tax slab.

A Certified Financial Planner helps reduce these taxes through proper planning.

What Role Your Daughter Can Play Financially?
You are not dependent on your daughter. That is a strength.

If she wants to support you voluntarily, treat it as a bonus.

Do not rely on her income for your monthly needs.

Focus on being financially independent with dignity.

Avoid These Mistakes in Retirement Stage
Do not put entire corpus in bank FD. It gives poor returns.

Do not give large gifts or loans to relatives now.

Avoid experimenting with risky schemes or unregulated agents.

Don’t chase high returns. Focus on steady and safe income.

Create a Retirement Plan Document
List all your income sources clearly.

Mention all investments and account details.

Write emergency contact and nominee names.

Keep your daughter informed, even if she is not involved directly.

Review this document once a year with your MFD-CFP.

Finally
Yes, you can retire now with proper planning.

Your current corpus is good for a simple, peaceful retired life.

Divide your corpus smartly across growth, income, and safety.

Stay invested in actively managed mutual funds through MFD-CFP only.

Let your money work for you for the next 25+ years.

You have taken care of your daughter. Now it is time to take care of yourself.

You can enjoy your retirement with pride, independence, and financial comfort.

Best Regards,
?
K. Ramalingam, MBA, CFP,
?
Chief Financial Planner,
?
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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