I am 56. I work in a public sector bank. Due to work pressure, I wish to take VRS. Both my children are married and well-settled. Is it possible to live comfortably with my pension of ₹24,000? My wife and I are hale and hearty.

Nagu

Going by your monthly expenses and financial assets, you can certainly put in your papers and live happily for the rest of your life. Earnings are for survival. If you have adequate assets, there is no point in building stress and ruining your health.

The present monthly expenses of ₹20,000, if inflated at 7 per cent, will be ₹39,400, when you turn 65. If the pension amount of ₹24,000 grows at 5 per cent with variable DA, it will grow to ₹39,000, by the time you are 65. From hereon you will have a shortfall in your monthly income.

If you invest your retirement benefits along with the existing fixed deposits at a cumulative rate of interest, it will be worth ₹82.6 lakh by the time you turn 65.

Break it into multiple deposits, some at cumulative, and the rest in monthly option.

If the deposits earn post-tax return of 7 per cent, it will support your wife through her lifetime without disturbing the capital. Afterwards you can leave the deposits as estate to your children.

During market rallies, gradually reduce your direct equity market exposure and shift it to balanced funds.

Whenever the market delivers abnormal return, say, 25 per cent and above, book profits and move it to debt investments to protect your corpus. You need not build a separate emergency fund, since close to 65 per cent of your investments will be in fixed deposits by the time you are 65.

The writer is a financial planner and founder, myassetsconsolidation.com

Send your queries to blinefp@gmail.com

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