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I am 38 and my wife 35. She is unemployed. I am keen to do social work and would like to retire within the next five years. I live in my own house without any liability. As both of us are healthy, I have not bought any health insurance.
Based on my monthly expenses, how much money should I have at the time of retirement? Since I do not have pension benefits, I am willing to invest in risky assets to build my retirement corpus. Let’s assume that we may live up to 80.
- Seeman
Post-retirement, if you lose money, you will be tempted to recover the capital by indulging in trading which can further increase your risk. Given your savings, without taking on too much risk, you can meet the target.
The present expenses of ₹30,000 will be ₹40,200 at the time of your retirement, if inflated at 7 per cent. To receive such a monthly inflow at retirement, you should have a corpus of ₹1.58 crore and it should able generate a return of 1 per cent above inflation to sustain till your wife turns 80.
If you construct a portfolio and manage to earn returns in line with inflation, then you should have a corpus of ₹1.92 crore.
If your current debt investment earns a post-tax return of 7 per cent, at 43, your portfolio value would be ₹1.05 crore. If you generate a return of 12 per cent in the equity portfolio, it will bring in ₹44 lakh.
If you save ₹40,000 every month till your retirement, and if the portfolio delivers a return of 9 per cent, it will amount to ₹30 lakh. In all, you would be able to accumulate ₹1.79 crore. If you are eligible for retirement benefits such as gratuity and leave encashment, you can bridge the gap and reach your targeted corpus.
Health insurance: There is no guarantee that hale and healthy individuals will not have any ailments in their later years.
Moreover, if after retirement there is any major ailment, that will drain your corpus. We suggest you buy a medical policy now for ₹5 lakh. Later, take another super top-up plan for ₹10 lakh with a deductible value of ₹5 lakh. For such a plan, the premium outgo will be ₹2,500. Also take a critical cover.
The writer is a financial planner and founder myassetsconsolidation.com. Send your queries to fp@thehindu.co.in
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