I am working in a public sector bank and will retire this May. My wife is 58.My retirement benefits will be Rs 40 lakh and a monthly pension will be Rs 25,000. We have two daughters - one is married and and provision has been made for the other one's marriage. I have booked a flat in Gurgaon and will take possession in March 2013. Till that I will continue to live in another premises, paying a rent of Rs 21,000. I paid a sum of Rs 1 lakh to my employer and in return I will get medical coverage for Rs 7 lakh but on reimbursement basis .

My investments: I have Rs. 1 lakh in PPF which will mature in 2013 and an investment of Rs 1.50 lakh in NSS which I am holding for more than 10 years .

We expect to live up to 80 years. Our monthly expenses are Rs 20,000.We may need an amount of Rs 10 lakh at the time of possession of flat. If I can invest Rs 30 lakh in bank FD. Let us know if all this would be sufficient to take care of our expenses.

— A K Arora

If you wish to live comfortably till your life expectancy or increased longevity, all you need to do is to invest your retirement benefits in a deposit providing compounded interest.

Such a strategy will ensure that it not only meets your requirement you can also leave the deposits as estate to your daughters.

You need to do this for the next seven years . If your monthly pension is assumed to grow at 4 per cent per annum and if the average inflation is seven per cent, you will encounter your first short fall in when you turn 67.

After setting off Rs 10 lakh for house purchase, if you deposit Rs 25 lakh for seven years at 10 per cent return with interest payable at maturity, your total proceeds will be Rs 48.71 lakh.If you redeploy the same at 6 per cent payable monthly, you can meet your needs till 80.Although NSS was discontinued in 2002, it will still pay you 8.5 per cent interest. Since interests earned on NSS are taxable, redeem it after retirement or in April 2013 to reduce your tax outgo.

Medical facility: It is good that you are covered. But your medical expenses are going to be reimbursed, which means that you should need to have an emergency fund . Of the retirement benefits earmark Rs 5 lakh as emergency fund and invest separately.

I am 68. My present income from pension, interest and rentals is Rs 60,000 per month. My wife, 61, one of my sons with his family stay with us . Our monthly expenses of Rs 45000 including cost of medicines of Rs 9500 are met by me. My interest income comes from NBFCs deposits and Post office schemes. I am covered under group mediclaim by my ex-employer.

My investments are Rs5 lakh in gold, 100 units in Gold EFTs, Rs 1.3 lakh in shares, Rs 2 lakh in PPF, Rs 2.5 lakh in PMS and Rs 3.5 lakh in SB account. My immovable assets are: agricultural land and a flat in Delhi.

We require your advice on:

What I should do with my possible surplus of about Rs 15,000.

Should I readjust my investments to offset any future increases in expenses? We expect to live till 80.

— P.Rajendran .

Retirees need to have proper asset allocation to increase monthly income. Protective assets such as deposits will provide stable return rather than gold. Instead of using it merely as a diversifier, gold these days is being used as an investment vehicle . If you hold 58 per cent of your assets in gold, it is not a good investment strategy. Bring it down to 10-15 per cent of the portfolio. Since you have not disclosed the structure of the PMS, it is difficult to make recommendations on it. However, if it is an aggressive portfolio, ask for a shift to large cap or index funds. Dilute all equity investment when you turn 73 and switch to debt to meet shortfall in your monthly needs from 76.

For retirees, PPF is not a good investment option as it spans 15 years. Switch to FD. If you have opted for PPF for tax savings purpose, continue the same. Five years from the date of investment, withdraw the permissible amount and reinvest to save tax. With equity market turning unpredictable, avoid direct equity exposure. Instead invest through mutual funds. With interest rates peaking, shift your SB account balance to a few FDs in order to have flexibility in case of any emergency needs.

With regards to your surplus, invest through systematic investment plan, Rs 2500 each in large cap funds such as Franklin India Bluechip and HDFC Top 200.

For the rest go for an RD with a bank.

You will face a shortfall in income when you turn 76. Utilise current savings in RD and SIPs to meet your needs till your life expectancy.

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