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I am 42 and work for a private sector company. My wife, 39, works for a quasi-governmental organisation with pension benefits. We have a son aged 11. I live with my parents in their house. I want to rent a bigger house for my family. I do not wish to purchase a house. I may inherit a property worth ₹30 lakh.
- Shriram
It is good to have goal-based investments, backed by suitable asset allocation. Theoretically, it may be good idea to live in rented places throughout your life, but in reality, it has its limitations.
Post-retirement, moving houses frequently will be challenging. A relationship with neighbors and the community gets built over time and frequent shifting may affect this balance and affect your general well-being, more so after you retire.
You can opt for retirement homes. The only concern here is that the cost of living in retirement homes will be higher due to the superior infrastructure offered for the aged.
To be able to meet your monthly expense of ₹45,000 post-retirement, you should have a corpus of ₹2.5 crore. This amount should earn a bit more than inflation.
Your current retirement corpus of ₹52 lakh, if allowed to grow at 12 per cent annually, would become ₹1.35 crore by the time you are 52. You will thus have a shortfall of ₹1.15 crore. To reach the target, you ought to save ₹72,150 every month. Increase allocations to your retirement savings once your son’s education is complete. To meet any further shortfall, your wife’s pension will come in handy.
Education: If your current investment grows at 12 per cent, you can comfortably meet the goal even if there is an increase in cost by 20 per cent.
Insurance: Your current health cover appears to be on the higher side, considering your family’s health history. Keep the personal health insurance cover at ₹10 lakh.
It is good to see that you have segregated both investment and insurance and have taken an adequate term cover for both you and your spouse.
Once you retire, discontinue the term insurance policy.
The writer is a financial planner and founder Myassetsconsolidation.com. Send your queries to >fp@thehindu.co.in
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