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Sanjeev

Sanjeev Govila  | Answer  |Ask -

Financial Planner - Answered on Feb 06, 2024

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to the armed forces personnel and their families.
He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.... more
Asked by Anonymous - Oct 16, 2023Hindi
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Money

For retirement calculation, how to calculate the corpus value required based on monthly income needed? Also, what is the best way to invest the corpus to get this monthly income?

Ans: There are multiple ways to calculate the required retirement corpus

1. Estimate monthly expenses, adjust it for inflation, and multiply by the expected retirement duration.

2. Corpus = (Monthly Income Needed * 12) * Life Expectancy in Retirement / Expected Return Rate (inflation adjusted)).

3. However, I recommend you to use free financial calculators available on the google to calculate present value of requirement.

Remember there's no single "best" way to invest, as it depends on your risk tolerance, time horizon, and goals. However, a good asset allocation portfolio will help you to attain your goal easily. Invest in a mix of equity, debt, and consider annuities for steady income, while periodically reviewing and adjusting your portfolio.
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  |7548 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 04, 2024

Asked by Anonymous - Nov 03, 2024Hindi
Money
Hi Sir. Can you pls tell me how to calculate my retirement corpus? I am 40 years old and plan to retire at the age of 50. At present, I need 50K per month for my expenses and I expect to stay alive till the age of 80. Also, I prefer having my retirement corpus in FD and Post Office deposits (I find MFs and Stock Markets risky). Pls provide detailed calculations for me to understand and improvise at my end. I look forward to your response. Thank You.
Ans: Your commitment to planning a secure future is excellent.

To help you understand, I’ll break down the process of calculating your retirement corpus step-by-step.

Step 1: Estimating Monthly Retirement Expenses
Current Monthly Expenses: At present, you need Rs 50,000 monthly.

Adjusting for Inflation: Since you plan to retire in 10 years, consider how inflation will affect your expenses. Assuming inflation at 6%, your monthly expenses at retirement may be higher. This will help ensure your savings retain their purchasing power.

Estimation for Future Needs: Multiply your current expenses by 1.06 (for 6% inflation) each year until your retirement at 50.

Step 2: Planning the Retirement Duration
Retirement Period: You plan to retire at 50 and expect your corpus to last until 80. That’s a 30-year retirement span.

Monthly Withdrawals: To sustain these 30 years, plan for monthly withdrawals that cover your expected expenses, adjusted for inflation. This approach will ensure financial security across your retirement.

Step 3: Estimating Your Total Corpus Requirement
Cumulative Value of Withdrawals: Sum up the monthly withdrawals needed for each year of retirement, considering inflation. This will give a cumulative corpus amount that accounts for both longevity and rising costs.

Building a Safe Corpus: Generally, for a 30-year retirement period, a corpus amounting to 20-25 times your first year’s retirement expenses is recommended. This serves as a buffer against market fluctuations and unexpected costs.

Step 4: Accounting for Interest Earned in Fixed Deposits and Post Office Schemes
Expected Returns: Fixed deposits and post-office schemes provide stable returns, but often at lower rates than inflation. Estimate a conservative return rate (typically around 6-7%) to plan effectively.

Balancing Growth with Safety: These traditional options offer security but may not keep pace with inflation over the long term. This makes it essential to build a slightly higher corpus to ensure your purchasing power remains strong throughout retirement.

Reinvestment Strategy: Since FD and Post Office returns are predictable, reinvesting interest annually can help extend the life of your corpus.

Step 5: Creating an Emergency and Healthcare Fund
Setting Aside Funds: Healthcare costs and unexpected expenses are likely in retirement. A separate emergency fund, ideally amounting to 1-2 years’ worth of expenses, is recommended.

Healthcare Provisions: With rising medical costs, consider maintaining an additional fund specifically for healthcare. Medical expenses typically rise faster than general inflation, making this fund crucial for peace of mind.

Step 6: Tax Planning for Fixed Deposits and Post Office Deposits
Interest Income Taxation: Interest earned from FDs and Post Office schemes is fully taxable as per your income tax slab. Account for this while planning withdrawals, as it impacts the effective income you’ll have each year.

Effective Net Income: Deduct estimated taxes from your total annual withdrawals. Planning for post-tax income helps maintain your target monthly expenses and ensures a smoother cash flow.

Step 7: Strategies to Beat Inflation Without High-Risk Investments
Diversify Across Safe Avenues: While FDs and Post Office schemes offer safety, they might not outpace inflation. Diversifying slightly within low-risk options, like senior citizen savings schemes, could be beneficial.

Consider Hybrid Options: Even low-risk hybrid funds have the potential to slightly improve returns over time. This can give your corpus a buffer without high market exposure.

Avoiding Complete Reliance on FDs: Since FDs can sometimes fall short of inflation, a balanced approach might help you gain a modest edge without sacrificing safety.

Step 8: Monitoring and Adjusting Regularly
Annual Review: Reviewing your retirement corpus and expenses yearly ensures you stay aligned with inflation and lifestyle changes.

Plan Adjustments: Adjusting for inflation and unexpected expenses allows your corpus to adapt over time. Rebalance your withdrawals if expenses are higher or returns are lower than expected.

Flexible Withdrawal Strategy: Adjust monthly withdrawals based on interest earned and actual expenses. A flexible approach helps in balancing between spending and preserving corpus longevity.

Step 9: Considering Alternatives to Traditional Fixed Deposits
Shortcomings of Complete FD Reliance: FDs are secure but may not fully protect against inflation over the long term. Balancing FDs with a mix of low-risk alternatives helps maintain purchasing power.

Post Office MIS as an Option: While also low-risk, schemes like Post Office Monthly Income Scheme (MIS) provide steady returns. These can be complementary to FDs, adding diversification without exposure to market volatility.

Final Insights
With a structured approach to your retirement planning, you’re already well on track. Staying informed on inflation, interest, and changing expenses will keep your retirement fund robust. Planning with a Certified Financial Planner is recommended to keep your approach aligned with your needs.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

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Then doctor asked her why she stopped and what I said, my wife said that he is asking for female staff and doctor said “I am a doctor and I am not having female staff and there is nothing male and female in doctor’s consultation” my wife got convinced and told me that we are continuing with this doctor and I also shaked my head as consent sign but not aware with the upcoming surprise and then she open her upper body part and doctor did the check up by pressing or whatever doctor does. And I was not ready for this So, I am still in trauma due to this, but I don’t want her to show her body to any male doctor. That picture comes again and again in my eyes. I don’t want to break my relation with wife, because we married 20 years before and we have 2 daughter and I love her too much. But she has disobeyed me and obeyed that doctor. I am in a trauma. What should I do to come out of this trauma. Please let me know.
Ans: To address your trauma, start by having an open and honest conversation with your wife about your feelings. Express your emotions calmly, without blame, so she can understand the depth of your discomfort and help you work through it. It's also crucial to recognize that trust and mutual respect are fundamental in any relationship. Your wife’s decision was likely driven by her need for medical care, not a desire to hurt or disobey you.

Consider seeking professional help for yourself. A therapist or counselor can provide a safe space for you to explore these feelings, work through the trauma, and develop strategies to cope with intrusive thoughts. They can also help you understand the importance of medical privacy and the necessity of certain procedures, which may ease your discomfort over time.

Additionally, you might want to explore couples counseling. This can help both of you navigate this situation together, rebuild trust, and strengthen your relationship. Remember, your goal is to maintain a loving and supportive partnership, and professional guidance can be instrumental in achieving that.

Your love for your wife and your desire to keep the relationship strong is evident. By addressing these feelings head-on and seeking support, you can move towards healing and maintaining the bond you cherish.

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Ramalingam

Ramalingam Kalirajan  |7548 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 17, 2025

Asked by Anonymous - Jan 17, 2025Hindi
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Money
I'm 35 years old. I want to invest INR 65000 for retirement at 50 years old. My current expenses 65000 per month. Please guide me.
Ans: Retiring at 50 with your current lifestyle requires a carefully crafted investment strategy. Here’s a detailed guide tailored to your goal.

Step 1: Define Retirement Corpus Requirement
Current Monthly Expenses: Rs. 65,000.
Inflation Adjustment: At 6% inflation, your expenses will increase significantly by 50.
Retirement Corpus: The corpus must sustain you for at least 30+ years post-retirement.
Lifestyle Goals: Include travel, medical emergencies, and aspirational expenses in calculations.
Step 2: Asset Allocation Strategy
A balanced mix of equity and debt instruments can help grow your wealth steadily while minimizing risks.

1. Equity Mutual Funds (70% Allocation)
Why Equity? High growth potential to beat inflation over the long term.
Recommended Categories: Flexi-cap, mid-cap, and large-cap funds.
SIP/Investable Amount: Invest Rs. 45,500 monthly in equity mutual funds.
2. Debt Instruments (30% Allocation)
Why Debt? Stability and regular income during volatile markets.
Recommended Options: PPF, short-term debt mutual funds, or NPS (Tier I).
SIP/Investable Amount: Allocate Rs. 19,500 monthly.
Step 3: Include Inflation Protection
Inflation reduces the value of money significantly over time.
Your retirement corpus should grow faster than the inflation rate.
Equity exposure helps overcome inflation impacts effectively.
Step 4: Ensure Tax Efficiency
1. Equity Mutual Funds
Tax Rules: Long-term capital gains (LTCG) above Rs. 1.25 lakh taxed at 12.5%.
Action Plan: Use annual redemption to manage gains below taxable limits.
2. PPF and NPS
Tax Benefits: Both offer tax-saving benefits under Section 80C.
Lock-in Period: Ensure alignment with your retirement timeline.
Step 5: Emergency Fund Creation
Build an emergency fund equivalent to 12 months’ expenses (Rs. 7.8 lakh).
Park it in liquid funds or a high-yield savings account for quick access.
Step 6: Health and Risk Coverage
Health Insurance: Ensure adequate coverage to avoid depleting investments during medical emergencies.
Life Insurance: Use a term plan to secure your dependents until you achieve your retirement goal.
Step 7: Regular Portfolio Reviews
Review your portfolio every six months.
Rebalance based on performance, changing goals, and market conditions.
Seek advice from a Certified Financial Planner for optimized asset allocation.
Step 8: Additional Recommendations
Avoid Real Estate: Illiquid and high transaction costs make it unsuitable for your timeline.
Avoid Direct Investments: Opt for regular plans via mutual fund distributors guided by a CFP.
Diversify Investments: Explore international mutual funds for added growth.
Step 9: Incremental Contributions
Increase your SIP amount annually by 10-15% to align with income growth.
This ensures your corpus grows significantly over time.
Finally
Achieving financial independence by 50 is ambitious but achievable. Consistency in investments, inflation-adjusted growth, and regular reviews are critical. Focus on disciplined execution of the outlined plan for a secure and fulfilling retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

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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