I am 45 years old and looking to retire as I don’t find my job satisfying anymore. My wife will continue working and is earning 50k a month. Our monthly expenses are 75k. We live in our own home with no dependents and no liabilities. Our corpus consists of 40 lacs in long term GSec, 57 lacs in PPF and 35 lacs in diversified equity funds. We earn rent of 20k a month from a flat valued at approximately 80 lacs. I also have a corpus of 60 lacs in NPS which will earn an annuity of 30k a month on exit. Will this be sufficient to maintain present lifestyle and last for lifespan upto 85 years or am I being hasty in quitting my job which earns me 1.5 lacs post tax
Ans: At 45, retiring early is an important decision. Your corpus and expenses need careful analysis. Let us assess if your current resources can sustain your desired lifestyle until 85.
1. Current Financial Overview
Your financial position is stable. Let us summarise your assets and income sources.
Rs 40 lakhs in long-term G-Secs.
Rs 57 lakhs in PPF.
Rs 35 lakhs in diversified equity mutual funds.
Rs 60 lakhs in NPS with an estimated annuity of Rs 30,000 per month.
Rental income of Rs 20,000 per month from a flat.
Your monthly expenses are Rs 75,000.
Your wife’s monthly income is Rs 50,000.
2. Income Sources Post-Retirement
Assessing post-retirement income ensures sustainability.
Rental income of Rs 20,000 per month.
Annuity income of Rs 30,000 per month from NPS.
Total passive income is Rs 50,000 per month.
Your wife’s income adds Rs 50,000, making the total income Rs 1,00,000.
Monthly expenses exceed passive income by Rs 25,000 if your wife stops working.
3. Corpus Utilisation and Sustainability
Your corpus must support expenses for 40 years.
Long-term G-Secs offer stable returns but might not beat inflation.
PPF provides safety, tax efficiency, and moderate growth.
Equity mutual funds offer inflation-beating growth for long-term needs.
Systematic withdrawals from the corpus can cover shortfalls.
4. Inflation Impact and Long-Term Planning
Inflation will significantly affect your expenses.
Assuming 6% annual inflation, expenses will double in 12 years.
Passive income sources must grow to keep pace with rising costs.
Equity exposure ensures growth but requires careful monitoring.
5. Asset Allocation for Retirement
Proper allocation ensures safety, liquidity, and growth.
Retain 50% in safe instruments like PPF and G-Secs for stability.
Allocate 30–40% to equity for long-term growth.
Keep 10% in liquid funds for immediate needs or emergencies.
6. Tax Efficiency and Withdrawals
Optimising withdrawals can save taxes.
Use tax-free returns from PPF first for withdrawals.
Interest from G-Secs will be taxable; plan withdrawals carefully.
Withdraw from equity mutual funds considering LTCG rules above Rs 1.25 lakh.
7. Reviewing Lifestyle Choices
Lifestyle adjustments can reduce financial strain.
Evaluate discretionary expenses like vacations or luxury items.
Maintain current expenses while planning for medical costs.
Prioritise health insurance for both of you to handle medical inflation.
8. Considering Wife’s Role in Financial Planning
Your wife’s income plays a crucial role.
Her income bridges the gap between expenses and passive income.
Discuss her retirement age and income potential post-retirement.
Joint investments and planning align your financial goals.
9. Re-evaluate Retirement Decision
Retiring now may need compromises.
Your job provides Rs 1.5 lakh per month post-tax, which supports higher savings.
Continuing for 5–7 years builds a stronger corpus.
This ensures less dependence on equity performance in retirement.
10. Long-Term Health and Lifestyle Preparedness
Early retirement requires careful planning for unexpected costs.
Plan for lifestyle expenses like hobbies or travel.
Build a health corpus for unforeseen medical expenses.
Ensure adequate insurance for major health risks.
Final Insights
Retirement at 45 is possible but may require adjustments.
Your current corpus and income provide a stable base.
Continuing your job for a few more years strengthens financial security.
Focus on balancing safety and growth in your investments.
Regularly review your portfolio with a Certified Financial Planner.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment