Your Financial Plan



I am 50, working in a private sector company. My wife is 49, and is diabetic. I have a son studying MS in the US. My parents are independent. I am quitting my high-stress job and taking up a training assignment from July. I may work till 53. Is it possible to be financial worry-free for the rest of my life?

Sampath Kumar

Nowadays, most individuals prefer to retire early and you are one of them. But when adequate financial assets such as fixed deposits, bonds, direct equity and mutual fund are not available to meet monthly expenses, you have to sell physical assets such as real estate to fund your retirement. With your current financial assets, it is not possible to retire at 53, you may have to work at least until 55. But if you are okay with selling your plot at a later date to meet living costs, then you can consider retiring at 53.

With average inflation at 7 per cent, assume if you retire at 55 you need ₹35,000 to meet monthly household expenses for you and your spouse. To receive such an income at retirement you need a corpus of ₹1.08 crore and it should earn one per cent over and above the inflation rate. If the existing financial assets, as a portfolio, deliver 10 per cent return, it will account for ₹76 lakh. You will have a shortfall of ₹32.3 lakh.

To meet the target in the next 60 months you must invest monthly ₹41,800. With your current surplus, it will be a tall order. Since the new work profile is low on stress, work as long as possible if you want to bequeath the plot to your son. But if you are not keen on that, hang up your boots. Buy a health policy for ₹5 lakh each for your wife and yourself. For your wife, buy a policy with lower waiting period for pre existing aliments.

The writer is a SEBI Registered Investment Adviser and Founder, myassetsconsolidation.com.

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