Your Financial Plan

I am 52 and have opted for voluntary retirement. My wife, 49, who is employed, is eligible for a fixed pension of ₹15,000.

Her retirement benefits such as EPF will be minimal since we withdrew money recently for buying a house. My wife’s employer will cover hospitalisation costs, post-retirement too. Please suggest an investment plan for me to deploy my retirement benefits.

Baskaran

Your wife’s pension being a fixed one, you may likely feel shortfall in later years as expenses shoot up due to inflation. So you need a way to earn inflation beating returns early on to build a large corpus to supplement the pension. One way to do that is to add a dose of equity to your portfolio.

At the time of your wife’s retirement in nine years, the monthly expense for the two of you (as your daughter will be married) will likely be ₹50,000, assuming 7 per cent inflation. If inflation stays at those levels, to meet expenses till your wife turns 85, you need a corpus of ₹1.4 crore, earning 1 per cent more than inflation. For this you need a corpus of ₹1.4 crore, earning 1 per cent more than inflation to meet monthly expenses till your wife turns 85.

Out of your retirement settlement amount of ₹52 lakh, set aside ₹11 lakh for your daughter’s marriage. Invest the balance in a portfolio that earns 8.5 per cent annually (balanced fund with 70:30 debt and equity), after nine years, it will be ₹85 lakh.

Invest ₹11 lakh in an FD and use the interest for daughter’s college fee. The insurance maturity of ₹4 lakh will together meet the marriage expenses.

Your portfolio may face a shortfall later and you can consider availing the reverse mortgage facility.

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