50-Year-Old With Financial Concerns: Can I Manage My Debt, Education, and Retirement?

I am seeking guidance on my current financial situation. I am 50 years old, with a net take-home income of 1.42 lacs per month, while my wife earns approximately 75k monthly. We have two daughters pursuing higher education, with annual fees totalling 6.10 lacs. In the wake of the COVID-19 pandemic, I faced a significant setback when I was unable to pay my home loan EMI, leading me to opt for a moratorium. Despite having already paid approximately 43.85 lakhs towards my home loan of 58.50 lakhs taken in 2017, the principal outstanding has astonishingly increased to 59.45 lakhs. I now find myself committed to an EMI of 65,000 monthly, further straining our financial resources. To cover both my daughters first-year college fees, I took out a gold loan of 5.5 lakhs, for which I currently pay 50,000 a month. I had invested in a family health insurance policy with Star Health, covering 10 lakhs, but due to poor service I stopped paying my premium, which had an accrued value of 17.50 lakhs. I hold a provident fund account with a balance of 2.5 lakhs. I am concerned about planning for my elder daughter's wedding in the next 2 to 3 years and my retirement. I would appreciate any advice or strategies you could provide to help me navigate this situation effectively.

Ans: Hello;

Try and understand from the home loan lender as to how 59.45 L principal is overdue despite paying a sum of 43.85 L, despite factoring 80% of this as interest payment, the overdue principal should be below 50 L.

Double check if this is as per the terms of moratorium.

If you are not satisfied with replies from the lender escalate the matter to the highest authority at lender or RBI.

Lender can't behave irrationally just because you availed moratorium during COVID.

In my view you should have just sold the gold rather then taking loan against it.

That way you could have lessened EMI burden on your finances and ensured investments for retirement and other goals.

Unfortunately we have a tradition of attaching emotional value to precious metals and real estate.

The best "jewellery" you can offer to your kids is good education, which you have already done.

In matters of health insurance never discontinue a policy due to dissatisfaction with the insurer, port it to another insurer, 1.5/2 months before the renewal date so that your benefits remain intact. Now you may be need to find another health care insurance.

You may begin a monthly sip of 25-30 K in diversified large cap oriented mutual fund for 5 years.

Also give a thought to NPS, you can contribute till 70 age, for retirement pension.

Best wishes;

Ans: Income and Expense Overview
– Your monthly take-home is Rs. 1.7 lakh
– Combined home loan EMI is Rs. 1,00,054
– Auto loan EMI is Rs. 18,552
– Total EMI outflow is Rs. 1,18,606 per month
– This leaves you with about Rs. 51,000 for all other expenses
– You are under high fixed obligation due to loans
– This limits your savings and investment capacity

– However, your discipline in EMI payments is strong
– You have kept Rs. 6 lakh as emergency fund in FD
– That is a good buffer
– You also have Rs. 6 lakh in mutual funds
– And around 10 tola gold (approx Rs. 6–7 lakh)

– Your debt level is high, but you are managing it without default
– That shows resilience and commitment

Assessment of Current Loans
– You have two home loans, total Rs. 93 lakh
– Combined EMIs are Rs. 1,00,054
– One loan is for 135 months (over 11 years)
– Other loan is for 164 months (about 13.5 years)
– Auto loan of Rs. 11.5 lakh adds pressure with Rs. 18,552 EMI

– Loans are eating 70% of your income
– This restricts wealth-building and puts stress on monthly budget

– If income doesn’t grow, savings may suffer
– You must plan carefully to balance debt and future goals

Should You Increase EMI and Prepay Loans?
– Yes, increasing EMI annually is a good strategy
– This brings down the interest burden and shortens loan duration
– Prepaying home loan is also beneficial if done smartly
– Focus more on prepaying auto loan first

– Auto loan has shorter life and higher interest cost
– Clear it off within 3–4 years if possible

– After that, shift focus to prepay home loans step-by-step
– Avoid using emergency fund or MF corpus to prepay
– Use only surplus from salary hikes and bonuses

– You may increase EMI by 5–10% every year
– That will bring strong interest savings
– But don’t reduce emergency fund below Rs. 6 lakh

– Prioritise long-term wealth creation along with loan reduction
– Don’t stop mutual fund SIPs to prepay loans
– Balance both smartly

Mutual Fund Investment Review
– You have Rs. 6 lakh in mutual funds
– You didn’t mention the type, but assuming it’s equity
– It is a good start for long-term goals

– Mutual funds should be your main investment tool going forward
– You must build SIP discipline even with EMI pressure
– Even Rs. 10,000 monthly SIP can create huge wealth in 15 years

– Use actively managed equity mutual funds
– They are more flexible and perform better than index funds
– Index funds do not adjust during market fall or rise
– Active funds are handled by experienced fund managers

– Avoid direct mutual funds as well
– Direct plans may look cheap but give no guidance
– Investing through Certified Financial Planner helps manage risk
– Regular plans offer service, reviews and help in tough markets

Emergency Fund and Safety Net
– You have Rs. 6 lakh in FD
– This is sufficient for now
– It covers at least 4–5 months of your expenses and EMIs

– Do not use this FD for investment or prepayment
– It is your safety cushion against job loss or medical emergencies

– Also, ensure you have term life insurance
– You are the only earning member with high debt
– Take a term plan of at least Rs. 1 crore or more
– It will protect your family from loan burden in your absence

– Health insurance is also crucial
– Take Rs. 10 lakh family floater for your family
– Don’t rely only on employer cover

Children’s Education Planning
– Your daughters are 8 and 5 years old
– Their higher education will begin in 10–13 years

– You must start SIPs now for their goals
– Begin with separate SIP for each child
– Use child-labeled mutual fund schemes or long-term equity funds
– Avoid ULIPs or child insurance plans
– These mix insurance with investment and give low returns

– Mutual fund SIPs offer higher growth and flexibility
– Start with minimum Rs. 5,000–7,000 per child per month
– Increase this every year as EMI burden reduces

– Your gold can also be used for children’s expenses later
– It will work as buffer support

– Don’t depend only on gold or loans for their education
– Planned SIPs will give you full control

Retirement Corpus Planning
– You are 39 now
– Retirement at 60 gives you 21 years
– You need to build wealth during this time

– Your current focus is debt reduction
– But you must slowly shift to wealth creation
– Start SIP for retirement, even if small now
– Rs. 5,000 per month is enough to begin

– Increase the SIP amount as EMI reduces
– Goal should be Rs. 25,000–30,000 monthly SIP after 5–6 years
– This can create sufficient retirement corpus in time

– Don’t stop SIPs when market falls
– Stay invested for full term
– Review portfolio yearly with Certified Financial Planner

– Avoid index funds and direct funds for retirement
– You need professional management and timely advice

Physical Gold Holding
– You hold 10 tola gold, approx Rs. 6–7 lakh
– Gold is good for diversification
– But don’t increase gold further

– Gold does not give regular income or compounding
– Use it only during daughter’s marriage or big expenses

– For long-term goals, equity mutual funds are better
– They offer higher returns and tax advantages

Taxation on Investments
– Equity mutual funds are taxed only when sold
– LTCG above Rs. 1.25 lakh is taxed at 12.5%
– STCG is taxed at 20%

– Debt mutual fund gains are taxed as per your slab
– FD interest is also fully taxable

– So mutual funds are tax-efficient for long-term goals
– FDs are not tax-efficient but useful for safety

Future Action Plan – Step by Step
– Keep Rs. 6 lakh FD for emergencies
– Don’t use this for prepayment or investing
– Increase EMI yearly by 5–10% if income rises
– Prepay auto loan first, then target one home loan
– Don’t stop SIPs during loan repayment
– Build minimum SIP of Rs. 15,000 total per month now
– Divide between retirement and child education
– Take term insurance of at least Rs. 1 crore
– Take health cover of Rs. 10 lakh for family
– Slowly reduce gold exposure if needed

Finally
Your debt pressure is high, but your financial behaviour is very responsible. You have created buffers. You are planning ahead.

Yes, increasing EMIs and prepaying debt is wise. But do it gradually. Do not stop mutual fund investments. Wealth creation and debt reduction must go together.

You are at a turning point in your financial journey. Right steps from now will secure your future. Stay consistent. Review yearly with a Certified Financial Planner.

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