Hi Anu,

I am 50, male, working in PSU and hail from a village background.

My children are grown up now without having affection with their village roots.

For me, it is disappointing as I do not feel connected to the city I am living in.

Also, I do not find motivation to settle in the polluted city.

Despite all odds, I still have longing for my village but have strong fear that I will be alone at the fag end of life.

Even my wife do not support my idea to go back and live at a place where there is not medical facility.

I ponder this issue again and again and fill with dissatisfaction by the very purpose of moving ahead in the life.

Ans: It's important to think practically not panic and preempt,something out of nothing ... insecurity in your job creeps in out of various situations, understand what's triggering that, address the problem, don't jump from frying pan to fire.

The current Hybrid model means you need to report to the office atleast 2 days a week, what's your travel & stay plan,from home town to Bangalore, will you really save...or spend more?

Learning mother tongue is from mother n no need to relocate..!?
Be grateful for the equal opportunity Bangalore gives people from all over India, pick up your performance, don't look for shortcuts.

Ask your wife to do a work from home job or take tuitions at home,to supplement the income, if the need be!?

Ans: Great decision.. Go back to the roots ..share knowledge.

Be the brain of your village...CVO.. All the best!

However if you need professional advice happy to assist!

https://m.me/maxim.emmanuel.2024

Ans: Evaluating Early Retirement in a Tier 2 City

Congratulations on your financial discipline and foresight in securing your family's future. You have a substantial corpus of Rs 2.4 crores, no loans, and a well-planned approach for your daughter's education and marriage. With your 2 BHK home generating rental income of Rs 30,000 per month and lifelong medical coverage from your company, you are in a strong position. Now, let's analyze the feasibility and implications of retiring early, moving to a tier 2 city, and living comfortably within your means.

Understanding Your Current Financial Position

You have accumulated a significant corpus of Rs 2.4 crores. This is a strong foundation for early retirement. Let’s break down your financial assets and income sources:

Corpus: Rs 2.4 crores
Rental Income from 2 BHK: Rs 30,000 per month (Rs 3.6 lakhs per year)
Lifelong Medical Coverage: No cap
Monthly and Annual Expenses Assessment

Before making a decision, it’s crucial to estimate your expected monthly and annual expenses in a tier 2 city. Consider the following categories:

Housing Rent: Depending on the city, rental expenses might vary. Assume Rs 15,000 per month for a comfortable home.
Utilities and Maintenance: Electricity, water, internet, and other utilities. Estimate Rs 5,000 per month.
Groceries and Household Expenses: Basic living expenses for a family of three. Estimate Rs 20,000 per month.
Transportation: Public transportation or fuel costs for a personal vehicle. Estimate Rs 5,000 per month.
Healthcare and Insurance: Although your medical is covered, allocate Rs 2,000 per month for any unforeseen expenses.
Lifestyle and Leisure: Dining out, entertainment, and hobbies. Estimate Rs 5,000 per month.
Miscellaneous: Unplanned expenses. Estimate Rs 3,000 per month.
Total Monthly Expenses: Rs 55,000

Annualizing these costs:

Total Annual Expenses: Rs 6.6 lakhs

Income vs. Expenses

Your rental income of Rs 3.6 lakhs per year covers a significant portion of your annual expenses. The remaining Rs 3 lakhs can be drawn from your corpus.

Sustainable Withdrawal Rate

A safe withdrawal rate for retirees is typically 4% of the corpus per year. Let’s calculate:

4% of Rs 2.4 crores: Rs 9.6 lakhs per year
Your annual expenses of Rs 6.6 lakhs fall well within this limit, allowing for sustainable withdrawals without depleting your corpus rapidly.

Investment Strategy for Corpus

To ensure your corpus lasts through your retirement, it’s important to invest wisely. Consider a mix of the following:

Equity Mutual Funds: For long-term growth.
Debt Mutual Funds: For stability and regular income.
Fixed Deposits: For safety and assured returns.
Assuming a Conservative Return

Assume a conservative annual return of 7% on your investments. This is achievable with a balanced portfolio of equities and fixed-income instruments.

Annual Return on Rs 2.4 crores at 7%: Rs 16.8 lakhs
Managing Inflation

Inflation erodes the purchasing power of money over time. Assume an average inflation rate of 5% per year. Your investment strategy should aim to beat inflation.

Adjusting for Inflation

To maintain your lifestyle, your corpus and income need to grow at least at the inflation rate. A diversified portfolio can help achieve this.

Lifestyle Considerations in a Tier 2 City

Moving to a tier 2 city can offer a lower cost of living while maintaining a good quality of life. Consider the following aspects:

Housing Costs: Significantly lower than in metropolitan areas.
Community and Lifestyle: Tier 2 cities often have a close-knit community feel, with various amenities.
Healthcare Facilities: While major treatments might require travel to bigger cities, routine healthcare is usually adequate.
Risks and Contingencies

Every plan comes with risks. Consider the following:

Market Volatility: Market fluctuations can affect your investment returns. Diversification helps mitigate this risk.
Health Emergencies: Despite medical coverage, consider a health emergency fund.
Unexpected Expenses: Maintain a contingency fund for unforeseen expenses.
Creating a Financial Plan

A well-structured financial plan will guide you through retirement. Here’s a suggested approach:

1. Emergency Fund:

Set aside 6-12 months of expenses in a liquid fund. This provides a safety net for unexpected situations.

2. Investment Allocation:

60% in Equity Mutual Funds: For long-term growth.
30% in Debt Mutual Funds and Fixed Deposits: For stability and regular income.
10% in Liquid Funds: For emergency and short-term needs.
3. Regular Monitoring and Review:

Regularly review your investments and expenses. Adjust your strategy based on market conditions and personal needs.

4. Health Insurance:

Even with company-provided coverage, consider a personal health insurance policy for additional protection.

Retirement Lifestyle and Goals

Consider your lifestyle and goals during retirement. Think about:

Hobbies and Interests: Pursue activities you enjoy.
Travel Plans: Allocate a budget for travel and experiences.
Volunteer Work: Engage in community service or social work.
Impact on Family

Discuss your plans with your family. Ensure they are comfortable with the move and the lifestyle changes. Your daughter’s education and social life should be considered.

Creating a Legacy

Plan for your daughter’s future and any legacy you wish to leave. Consider estate planning and creating a will.

Conclusion

Retiring early and moving to a tier 2 city is feasible with your current financial situation. Your corpus, combined with rental income, can support a comfortable lifestyle. Carefully planning and investing your corpus, managing expenses, and considering inflation will ensure financial security. Consulting a Certified Financial Planner can further refine your plan and provide personalized advice. Wishing you a fulfilling and financially secure retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hi. You are thinking wrong. Your thoughts are not practical. Along with you, your family members will come under huge tension from a single wrong step. First, you talk to a family person, whom you trust more. If you do not, then talk with a psychiatrist or a counselor.

Radheshyam Zanwar, Aurangabad (MS)