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Retired with a 1 Lakh Pension - Should I Ask my Son to Quit His 80k Job to Look After Us?

Ramalingam

Ramalingam Kalirajan  |6568 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 31, 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
Nibedita Question by Nibedita on Jul 30, 2024Hindi
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Sir, I am a retired person having a pension of 1 lakh. I have 33 lakhs in PPF, 50 lakhs in bank FD, 60 lakhs in share under PMS, 28 lakhs in MF, two houses with one house in rent of 30k pm, home loan of 10 lakhs. My only son is working with 80k salary. Can I ask him to take retirement to look after us

Ans: You have a stable pension of Rs 1 lakh per month. Your PPF account holds Rs 33 lakhs. You also have Rs 50 lakhs in a bank FD. Your shares under PMS are valued at Rs 60 lakhs. Your mutual funds are worth Rs 28 lakhs. You own two houses, one of which generates a rental income of Rs 30,000 per month. You have a home loan of Rs 10 lakhs.

Dependence on Son
Your son earns Rs 80,000 per month. You are considering asking him to take early retirement to look after you. Let's evaluate the financial and emotional aspects of this decision.

Financial Considerations
Your Pension and Income: Your pension and rental income provide a stable monthly inflow. This can cover your regular expenses.

Assets: Your PPF, FD, shares, and mutual funds offer substantial financial security. They can be used for future needs or emergencies.

Home Loan: You have a home loan of Rs 10 lakhs. Ensure it is manageable within your current income and assets.

Asking Your Son to Retire
His Financial Independence: Your son’s financial independence is crucial for his future. Early retirement could affect his long-term financial stability.

Supporting You: While he might want to support you, his income is also important for his family and future plans.

Alternative Solutions
Professional Care: Consider hiring professional care services. This ensures you receive proper care without affecting your son's career.

Family Discussions: Have an open discussion with your son about your needs. Explore solutions together that balance his career and your care.

Evaluating Your Portfolio
PPF and FD: These provide safety and stable returns. Continue maintaining them for risk-free growth.

Shares under PMS: Ensure your portfolio is well-managed. Regular reviews can enhance returns and manage risks.

Mutual Funds: Diversify your mutual fund investments. Opt for a mix of equity and debt funds to balance growth and safety.

Managing Home Loan
Repayment: Evaluate options to repay the home loan early. This reduces financial stress and interest burden.

Rental Income: Use your rental income to support loan repayments or reinvest in safer assets.

Final Insights
Your financial position is stable with diverse assets. Asking your son to retire might not be the best solution. Consider professional care and open family discussions. Ensure your investments are well-managed and balanced for future needs.

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  |6568 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 31, 2024

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Hello Ramalingam Sir, Hope are doing well. I am 37 years now, my monthly Salary ?83000 + other source of income is ?35000. I have a car loan of ?31250 for 7 years, I have started SIP of ?10000 for my children further education goal, I have also started NPS with ?5000, I stay in rented house with my joint family. Can you please help me secure for my retirement and also for my children further goals.
Ans: Your monthly salary is Rs 83,000 and you have an additional income of Rs 35,000. You also have a car loan EMI of Rs 31,250 for the next seven years. Additionally, you have started a SIP of Rs 10,000 for your children’s education and are contributing Rs 5,000 to the National Pension System (NPS). You live in a rented house with your joint family. Let's dive into the details to help you secure your retirement and your children's future.

Evaluating Current Financial Commitments
First, let's consider your car loan. The EMI of Rs 31,250 is a significant portion of your monthly income. Managing this commitment effectively is crucial. Paying off this loan on time will ensure you don’t incur additional interest or penalties.

The SIP of Rs 10,000 for your children's education is a good start. It shows you are proactively planning for their future. Similarly, your NPS contribution of Rs 5,000 is a positive step towards building a retirement corpus. However, we need to ensure that these investments align with your long-term goals.

Monthly Budget and Expense Management
Managing your expenses is key to achieving your financial goals. Your total monthly income is Rs 1,18,000 (Rs 83,000 + Rs 35,000). After deducting your car loan EMI (Rs 31,250), SIP (Rs 10,000), and NPS (Rs 5,000), you are left with Rs 71,750.

It’s important to create a detailed budget to track your spending and ensure you have enough for savings and investments. Prioritize your expenses and look for areas where you can reduce unnecessary spending. This will help you allocate more funds towards your financial goals.

Strategic Investments for Retirement
Building a retirement corpus requires a well-thought-out investment strategy. While NPS is a good start, relying solely on it may not be sufficient. Consider diversifying your investments to include a mix of equity and debt mutual funds.

Equity mutual funds, managed by professional fund managers, have the potential to offer higher returns over the long term. They can help grow your wealth significantly, especially if you start early and invest consistently. On the other hand, debt mutual funds provide stability and lower risk. A balanced portfolio with both can help achieve your retirement goals.

Planning for Children’s Education
Education costs are rising, and it’s wise to plan early. Your SIP of Rs 10,000 is a great start. However, consider reviewing the fund’s performance regularly and adjusting your contributions as your income increases. Investing in a combination of equity and hybrid mutual funds can offer a good balance between growth and stability.

Avoid direct mutual funds, which require you to manage investments yourself. Instead, opt for regular mutual funds through a Certified Financial Planner (CFP). They provide expert guidance, which can help you make informed decisions and optimize your returns.

Insurance: Protecting Your Family’s Future
Insurance is a crucial part of financial planning. Ensure you have adequate life and health insurance coverage. This will protect your family’s financial future in case of unforeseen events. Review your policies regularly to make sure they align with your current needs and circumstances.

Emergency Fund: A Financial Safety Net
Having an emergency fund is essential. It should cover at least six months of your living expenses. This fund will act as a safety net during unexpected situations like job loss or medical emergencies. Keep this fund in a liquid and easily accessible form, such as a savings account or a liquid mutual fund.

Review and Adjust Regularly
Financial planning is an ongoing process. Review your financial plan regularly to ensure it aligns with your goals and current situation. Adjust your investments and contributions as your income and expenses change. Regular reviews with a Certified Financial Planner can provide valuable insights and keep you on track.

Conclusion
By understanding your current financial situation, managing expenses, and strategically investing, you can secure your retirement and your children's future. Diversify your investments, avoid direct funds, and seek professional advice from a Certified Financial Planner to optimize your returns. Regular reviews and adjustments will ensure your financial plan remains effective and aligned with your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6568 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 16, 2024

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I am 61 years and retired from central government. Getting 48000 and 30000 as pension and rent. All my retirement benefits are exhausted on building of house and education loan. I need 5000000 fifty lakhs in seven years. What i should do. This amoint to be given to my son and what way i accummulate.
Ans: I appreciate your commitment to helping your son. Let's explore ways to accumulate Rs 50 lakhs in seven years.

Evaluate Current Income and Expenses

Track your monthly income of Rs 78,000. Prioritise your essential expenses and find areas to save.

Create an Investment Plan

Consider investing in mutual funds. Actively managed funds often outperform index funds, especially in volatile markets.

Benefits of Actively Managed Funds

Actively managed funds are handled by expert fund managers. They can adapt strategies based on market conditions.

Systematic Investment Plan (SIP)

Start a SIP to invest regularly. This helps in averaging costs and reduces market risk.

Consider Balanced Funds

Balanced funds invest in both equity and debt. This provides growth and stability.

Emergency Fund

Set aside a small amount each month for emergencies. This ensures financial security without touching investments.

Avoid Real Estate and Annuities

Real estate can be illiquid and risky. Annuities often have high fees and low returns.

Seek Professional Advice

Consult a Certified Financial Planner. They can tailor a plan to help you achieve your goal.

Stay Committed and Review Regularly

Monitor your investments and make adjustments if needed. Stay focused on your goal.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6568 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 23, 2024

Asked by Anonymous - Jul 10, 2024Hindi
Money
Sir i am 50 yrs old has rental income from two houses in mumbai is 70,000.00 (Worth 2.5cr).Son has completed engineering. Stocks worth 2.5cr, daughter in 9th std, fd worth 50lac. No debt and no loan in the house in which i live(worth 1.2cr).can i retire, need olan for monthly total 2.0lac expense.n
Ans: You are 50 years old with a solid financial base. You have two rental properties in Mumbai generating Rs. 70,000 per month. Your son has completed engineering, and your daughter is in 9th standard. You own stocks worth Rs. 2.5 crores, fixed deposits (FDs) worth Rs. 50 lakhs, and a house worth Rs. 1.2 crores with no debt. You want to retire and cover monthly expenses of Rs. 2 lakhs. Let’s evaluate your financial situation and structure a plan for a comfortable retirement.

Current Income and Assets
Rental Income: Rs. 70,000 per month
Stock Portfolio: Rs. 2.5 crores
Fixed Deposits: Rs. 50 lakhs
Primary Residence: Rs. 1.2 crores (No loan or debt)
Total Worth of Rental Properties: Rs. 2.5 crores
You have a substantial financial foundation that can support your retirement plan with careful management.

Monthly Expense Planning
Current Monthly Expenses: Rs. 2 lakhs
Income from Rentals: Rs. 70,000 per month
There is a gap of Rs. 1.3 lakhs per month between your income and expenses. This gap needs to be covered by drawing from your investments.

Income Generation Strategy
To meet your monthly expenses, you’ll need to create a stable and reliable income stream from your assets. Here’s how you can do it:

1. Systematic Withdrawal Plan (SWP) from Mutual Funds
Generate Regular Income:

Convert a portion of your stock portfolio into a diversified mutual fund portfolio.
Set up a Systematic Withdrawal Plan (SWP) from these funds to generate a consistent monthly income.
SWPs can provide you with a steady flow of income while keeping your capital invested for growth.
Withdrawal Amount:

Start by withdrawing Rs. 1.3 lakhs per month, adjusted for inflation over time.
Equity-Debt Balance:

Maintain a balance between equity and debt in your mutual fund portfolio.
Equity can provide growth, while debt can offer stability and reduce risk.
2. Interest from Fixed Deposits
Interest Income:

Your Rs. 50 lakhs in FDs can generate interest income.
Depending on the interest rate, this could add a supplementary income stream.
Laddering Strategy:

Consider using an FD laddering strategy, where you split your FDs into multiple maturities.
This can provide liquidity at regular intervals, ensuring you have access to funds when needed.
3. Dividend Income from Stocks
Dividend Yield:

Some of the stocks in your portfolio might provide dividends.
Reinvest dividends or use them as additional income to reduce the amount needed from your SWP.
Review and Rebalance:

Periodically review your stock portfolio to ensure it aligns with your risk tolerance.
Shift some funds to dividend-paying stocks if necessary.
Planning for Inflation
Inflation Adjustment:
Your monthly expenses will likely increase due to inflation.
Ensure your income sources, especially SWP and dividend income, grow at a rate that matches or exceeds inflation.
Periodically adjust the withdrawal amount in your SWP to match inflationary pressures.
Managing Healthcare Expenses
Health Insurance:

Ensure your health insurance coverage is adequate for your needs.
You should have a comprehensive health insurance plan covering both you and your spouse.
Medical Corpus:

Set aside a portion of your fixed deposits as a dedicated medical corpus.
This will provide a safety net in case of unexpected medical expenses.
Education Fund for Your Daughter
Setting Aside Funds:

Allocate a portion of your assets towards your daughter’s higher education expenses.
This can be done through a dedicated mutual fund portfolio or a combination of FDs and mutual funds.
Goal-Based Investments:

Consider investing in balanced or conservative mutual funds to grow this corpus with lower risk.
Plan the withdrawal to coincide with her higher education needs in the coming years.
Reviewing and Rebalancing the Portfolio
Regular Monitoring:

Regularly review your investment portfolio to ensure it is aligned with your goals.
Rebalance the portfolio annually or bi-annually to maintain the desired asset allocation between equity, debt, and other instruments.
Risk Management:

As you approach deeper into retirement, gradually reduce exposure to high-risk assets.
Focus on capital preservation while ensuring sufficient growth to cover inflation.
Legacy Planning
Estate Planning:

Consider creating a will to ensure your assets are distributed according to your wishes.
Include provisions for your children’s future needs, ensuring that their financial security is maintained.
Nomination and Trusts:

Ensure that all your investments, insurance policies, and assets have proper nominations.
Consider setting up a trust if you wish to provide long-term financial security for your family.
Final Insights
With your current assets and income, retiring at 50 is achievable. By carefully structuring your investments and setting up a reliable income stream, you can comfortably cover your monthly expenses while maintaining and growing your wealth. Regularly review and adjust your financial plan to stay on track and adapt to changing circumstances.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6568 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 31, 2024

Asked by Anonymous - Jul 24, 2024Hindi
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Hi, i wanted to ask for my retirement plaaning. My income is 1.5 lakhs per month and exps.of around 1.2 lakhs. I have lost all.my savings on my parents health. Wanted to save for retirement. I am 47 yrrs old. I have savings in NPS of 10 lakhs and Mutual funds of 3 lakhs.
Ans: Current Financial Status
Monthly Income: Rs 1.5 lakhs
Monthly Expenses: Rs 1.2 lakhs
Age: 47 years
Savings in NPS: Rs 10 lakhs
Savings in Mutual Funds: Rs 3 lakhs
You have faced financial challenges due to your parents' health. It’s great that you are looking to plan for your retirement now.

Assessing Your Current Investments
NPS (National Pension System)
Current Savings: Rs 10 lakhs
Advantages: Tax benefits, regular pension post-retirement.
Disadvantages: Limited liquidity, returns depend on market performance.
Mutual Funds
Current Savings: Rs 3 lakhs
Advantages: Potential for higher returns, flexibility.
Disadvantages: Market risk, requires regular monitoring.
Recommendations for Retirement Planning
Increase Savings Rate
Current Savings: Minimal due to high expenses.
Suggested Action: Aim to save at least 20% of your income.
Adjust Expenses: Reduce non-essential expenses to increase savings.
Enhance Investment in NPS
Tax Benefits: Additional tax deduction under Section 80CCD(1B).
Action: Increase contribution to NPS for higher corpus and tax benefits.
Long-term Growth: Ensure optimal asset allocation in NPS for balanced growth.
Increase Mutual Fund Investments
SIP Contributions: Start or increase SIPs in equity mutual funds.
Professional Management: Opt for regular funds managed by certified financial planners.
Diversification: Choose funds that balance growth and risk.
Avoid Direct Equity Investments
Complexity: Requires continuous monitoring and knowledge.
Recommendation: Focus on professionally managed mutual funds instead.
Emergency Fund
Importance: Essential for unexpected expenses.
Action: Build an emergency fund covering 6-12 months of expenses.
Placement: Keep this in liquid funds or a high-interest savings account.
Insurance Review
Health Insurance: Ensure adequate health insurance to cover medical expenses.
Life Insurance: Maintain sufficient life insurance to support dependents.
Regular Review
Periodic Assessment: Review and adjust your investments annually.
Seek Professional Help: Consult a certified financial planner regularly.
Building a Retirement Corpus
Set Clear Goals
Retirement Age: Target retirement by 60.
Required Corpus: Estimate the amount needed to sustain your lifestyle post-retirement.
Monthly Requirement: Determine the monthly income you’ll need after retirement.
Investment Strategy
Balanced Funds: Invest in balanced advantage funds for stable growth.
Equity Exposure: Gradually increase equity exposure for higher returns.
Debt Allocation: Keep a portion in debt funds for stability and safety.
Regular Contributions
Increase SIPs: Aim to increase your SIP contributions annually.
Consistent Savings: Ensure regular and disciplined savings for long-term growth.
Automatic Investments: Set up automatic transfers to investment accounts.
Final Insights
You have faced significant challenges, but it's great to see your commitment to retirement planning. Increase your savings rate and enhance your contributions to NPS and mutual funds. Regularly review your financial situation and consult a certified financial planner.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..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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