I am 50, and took voluntary retirement recently. My wife is a home maker. We have a daughter who is employed; we plan to spend ₹20 lakh for her marriage. My son is studying engineering and plans to pursue higher studies. I estimate that I will have to pay ₹10 lakh for his higher studies and fund the balance through an education loan. Please recommend an investment strategy to meet my monthly expenses.

Vaibhav

Most individuals who opt for VRS fail to factor inflation in their calculation. Though they can meet their monthly needs with ease initially, they may find it difficult to make ends meet later and may have to depend on their children. If you spend ₹30 lakh for your daughter’s marriage and son’s education, you will be left with a surplus of ₹30 lakh that can be invested.

But given that you are keen to maintain the same standard of living, you need to have an inflation adjusted income of ₹30,000 per month. This requires a corpus of ₹93 lakh earning a return of one per cent over the rate of inflation, to sustain you till 80. However, even if you dilute other assets, meeting your monthly needs will be a challenge. So, unless you generate returns far higher than the inflation, it may be difficult to meet your monthly expenses later in life.

One way to generate higher returns is to construct a portfolio with 50:50 in debt and equity which delivers a return of 10 per cent. In this case, you need to have a corpus of ₹70 lakh to sustain till you reach 80. You can consolidate all your assets, which can fetch you ₹46.5 lakh. Additionally, if you don’t want to depend on your children, reverse mortgage your property to meet the monthly needs. Your current health cover is too low, so increase it by ₹3 lakh.

The writer is a financial planner and founder of myassetsconsolidation.com. Send your queries to blinefp@gmail.com

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