Your Financial Plan



I am 60, retired from an IT company. My wife, 55, is a home maker. My children are not dependent on me. I have a minor health problem. I received ₹50 lakh as my final settlement on retirement. I used to trade in equity market and lost ₹14 lakh over the past two years. Do let me know how to manage my funds for the rest of my life.

Ranganathan

If you wish to live without depending on your children, you ought to sell your plot. If inflation sustains at 7 per cent in 10 years, your monthly expenses will double.

Fixed deposits: Since most of your deposits are maturing in three years, you face reinvestment risk on your FDs. Since more than 60 per cent of your investments are in fixed deposits, it will be a challenge to beat inflation consistently. Given the limitations in FDs and mutual funds, you need to sell the plot to raise money if your monthly interest income is unable to meet your needs.

Reverse mortgage: At 75, your monthly needs will be ₹41,400 if inflation continues to grow at 7 per cent. You might again face shortfall. You may need to get reverse mortgage from the bank to meet your expenses over the rest of your life.

Had you planned well and preserved your retirement kitty, you would have not been pushed to go for reverse mortgage. Many other senior citizens too think that they can trade in their free time to meet the monthly shortfall; this backfires in most cases.

Henceforth, be cautious with your capital, even in your mutual fund portfolio. When markets deliver abnormal returns, rebalance your portfolio as per the original allocation between fixed deposits and equity. Even if your portfolio delivers lesser returns due to re-balancing, it will still be above inflation.

The writer is financial planner and founder myassetsconsolidation.com. Send your queries to blinefp@gmail.com



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