Dear Expert, I'm 35 years old married and 6 year kid. My take home salary is ~3L. Better half take home salary is ~90k, but she just announced her resignation at job.
Debt Status: 100% debt free,
Cleared of HL on Q1'2025,
No car loan,
Investments status:
MF's started in April'2024 - 13.4L (Large mid cap index, Motilal Mid cap, small cap 250 Index). Opted for small cap index since it doesn't attract no exit load if I wanted to withdraw for any decent real estate buying opportunity. Planning to increase the SIP amount to 1.8L from next month.
PPF - 12.5K every month for me and for better half with two different accounts and they are just 2+ year old accounts. ~5L+ capital together.
EPF - 50k per month (Employee + Empleyer), ~35L so far.
Term Insurance: 2cr pure term plan only for me.
LIC jeevan Saral: 18 year plan. Purchased in 2011 for the sake neighbouring uncle. 14 years completed. Mature will be in 2029. I'm paying 24K yearly for this. I may get ~8L on mature.
Physical Gold: worth 80L which won't sell and will want to keep it for generational wealth.
I would like to consider retirement at 50 years age at worst due to uncertainty in tech field, which translates to another 15 years of professional career. Anything above 50 year above retirement is bonus. Also we have plans for 2nd baby in the near term.
Please let me know how much should I keep it for target for kids education and other expenses for our peaceful middle class living after retirement and how do I make better plan for it?
Ans: You have built a solid base. You are debt-free. That itself is a strong advantage. Let’s now carefully analyse your current position and map a 360-degree plan for retirement, child’s education, and a peaceful post-retirement life.
We’ll focus on six key areas: income planning, retirement corpus building, child education, insurance, asset allocation, and actionable steps.
Let us begin the journey.
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Your Present Financial Base – Strong and Balanced
Monthly income is Rs. 3 lakhs after tax. It is a strong cash flow.
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Your wife was earning Rs. 90,000. Her resignation may reduce savings temporarily.
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You are 100% debt-free. You cleared your home loan. This gives you more monthly surplus.
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You have Rs. 13.4 lakhs invested in mutual funds. SIP of Rs. 1.8 lakh is planned. This is aggressive and progressive.
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PPF contributions are happening monthly. That builds long-term safe capital.
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EPF corpus is Rs. 35 lakhs. A good long-term safety net.
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Term insurance of Rs. 2 crore is in place. Very essential.
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LIC Jeevan Saral has 4 years left. Yearly premium is Rs. 24,000. Maturity expected is Rs. 8 lakh.
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Physical gold worth Rs. 80 lakhs is preserved for future family value.
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This is a stable and carefully managed financial environment.
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Retirement at Age 50 – What Should Be Your Target Corpus?
You are now 35. You plan to retire in 15 years.
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Assume life expectancy of 85. That means 35 years post-retirement.
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Monthly expenses after retirement could be Rs. 1 lakh in today’s cost.
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Adjusted for inflation, your future monthly need will be much higher.
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You need a corpus that can beat inflation, support lifestyle, and handle medical costs.
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Your target corpus should be Rs. 6 to 7 crores at minimum. Aiming for Rs. 8 crores gives comfort.
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This target must include your EPF, mutual fund investments, and PPF.
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Gold, term insurance maturity benefits and LIC maturity can be kept separate.
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Child Education – Planning for Two Children
You have one 6-year-old child. You plan for a second child.
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Higher education will be in 12 to 20 years from now.
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Future cost of good education in India or abroad can be very high.
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You should aim for Rs. 80 lakhs to Rs. 1 crore per child.
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That means you must build a separate education corpus of Rs. 1.6 to Rs. 2 crore.
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This should not come out of your retirement funds.
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You may use a mix of mutual funds, PPF and Sukanya Samriddhi (if second child is girl).
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For current child, start a separate SIP of Rs. 20,000–25,000 monthly.
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For second child, start planning from now with Rs. 15,000 per month.
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Re-evaluating Existing Mutual Fund Choices
You are investing in index funds and small-cap index funds.
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Index funds have no flexibility. They only copy the market. No smart decisions possible.
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They may underperform in sideways or volatile markets.
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Actively managed funds have experienced fund managers. They can handle risks better.
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Actively managed funds may beat index funds over long periods.
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Small-cap index funds are more volatile. They can fall sharply in downturns.
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You are investing for retirement and education. Stability matters.
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Please move from index funds to actively managed large-cap and flexi-cap funds.
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Use multi-cap funds for child’s education goals.
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Always invest through a Certified Financial Planner and trusted MFD.
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Avoid direct funds. They do not offer advice or guidance.
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Regular plans offer human touch, risk monitoring and course correction.
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Your LIC Jeevan Saral Policy – Should You Continue?
You have completed 14 years. Maturity is in 2029.
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Premium is Rs. 24,000 annually. Maturity amount will be Rs. 8 lakh.
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Since only 4 years are left, continue till maturity.
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Do not surrender now. You already bore 14 years’ low return.
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Once you receive the amount in 2029, invest that in mutual funds.
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Insurance Coverage and Risk Management
You have a Rs. 2 crore term cover. You are the only earning member now.
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Since spouse has resigned, you should increase term cover to Rs. 3 crore.
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Health insurance for family is very essential.
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Please take family floater health policy with Rs. 10 lakh coverage.
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Also take personal accident insurance with income protection.
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Medical inflation is very high. Plan ahead.
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PPF and EPF – Role in Long Term Wealth
PPF accounts are only 2 years old. Tenure is 15 years. Keep investing regularly.
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EPF is growing well. You are contributing Rs. 50,000 monthly.
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Do not withdraw this unless urgent. This is your fixed income part of retirement.
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EPF gives stability. It is tax-free on maturity.
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Keep PPF and EPF for conservative portion of portfolio.
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Gold – Keep as Family Wealth, Not for Retirement
You have Rs. 80 lakhs in physical gold. That’s a strong backup.
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Do not plan to sell it. Use only in extreme emergencies.
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Do not count it towards your retirement or child education goals.
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It is better to keep gold as generational wealth as you planned.
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Monthly SIP Plan – Suggested Roadmap
Your SIP target is Rs. 1.8 lakh monthly.
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Allocate Rs. 1 lakh towards retirement mutual funds (mix of equity and hybrid).
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Allocate Rs. 35,000 towards child 1 education fund.
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Allocate Rs. 25,000 towards second child future fund.
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Keep Rs. 20,000 in flexible liquid mutual fund for emergency.
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Emergency Fund – You Need a Stronger One
Your monthly expense may be Rs. 1.5 to 2 lakh.
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Keep at least 6 months of expense in liquid mutual fund.
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That means Rs. 10 to 12 lakhs in emergency fund.
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This gives peace of mind when spouse is not earning.
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Step-by-Step Actions for Next 6 Months
Increase term cover to Rs. 3 crore.
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Buy family floater health policy and accident insurance.
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Shift mutual funds from index to actively managed options.
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Start separate SIPs for child 1 and future child.
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Build emergency fund with Rs. 10 lakh target.
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Do not increase lifestyle expenses now. Wife’s income is paused.
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Avoid any real estate purchase. Focus on corpus creation first.
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Final Insights
You have clarity, discipline, and vision. These are rare qualities at your age.
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Early retirement at 50 is realistic for you.
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But only if you separate retirement and education planning.
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Keep investing in PPF, EPF, and diversified mutual funds.
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Do not rely on index funds alone. Take active fund support.
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Work with a Certified Financial Planner to review yearly progress.
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Review and adjust every 12 months. Track goals clearly.
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Spend wisely. Invest with purpose. Track your plan regularly.
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That is how your peaceful retirement can become a reality.
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Best Regards,
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K. Ramalingam, MBA, CFP,
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Chief Financial Planner,
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www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Ganesh on Jul 13, 2021Hindi
