I am 49 yrs with monthly expense of 2 Lakhs and corpus of 7 CR so can i retire now with life expectancy of 75 yrs
Ans: Retirement Feasibility Analysis: Exploring Your Retirement Options
At 49 years old, contemplating retirement with a monthly expense of ?2 lakhs and a corpus of ?7 crores is a significant decision. Let's delve into whether you can comfortably retire now, considering a life expectancy of 75 years.
Evaluating Financial Stability
With annual expenses totaling ?24 lakhs, we must ascertain if your corpus can sustain your lifestyle throughout retirement. Calculating your withdrawal rate from the corpus is crucial.
Withdrawal Rate Assessment
Dividing annual expenses by retirement corpus:
?24 lakhs / ?7 crores = 0.342.......
Your withdrawal rate is approximately 3.43%.
Sustainable Withdrawal Rate
A withdrawal rate around 4% is often deemed safe for retirement planning. Your rate of 3.43% suggests that your corpus may adequately support your expenses in retirement.
Longevity Considerations
Given your life expectancy of 75 years, it's prudent to acknowledge the possibility of living longer. Advancements in healthcare indicate the need for financial preparedness beyond this age.
Risk Management Strategies
To address longevity risk and safeguard financial security:
Regularly reassess expenses and adjust withdrawal rates to accommodate inflation and lifestyle changes.
Diversify investments across asset classes to optimize returns and mitigate risk.
Periodically review retirement plans with a Certified Financial Planner to ensure alignment with goals.
Conclusion
Your financial situation suggests that retiring now could be feasible, given your corpus and expenses. However, it's imperative to remain vigilant regarding longevity risk and inflation to ensure sustained financial well-being throughout retirement.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in