I was recently quoted in Economic Times WEALTH (11-17 March 2024) in the Q&A section where a panel of experts answers readers’ questions related to various aspects of their personal finances.
The exact question is given below –
Here is the article page where the query is answered:
Here is the text version of the query and the reply –
Q – I am 57 years old working in an MNC. I have about Rs 3 cr in MFs, gold bonds & shares. I have accumulated gratuity and PF of Rs 1.5 crore and PPF corpus worth Rs 70 lakh. I have Tata AIA and Max ULIPs worth Rs 30 lakh and a Bajaj Allianz term policy which will give me about Rs 50 lakh when I turn 65. I have a medical cover of about Rs 50 lakh. I have my own house and no loans. My monthly expenses are Rs 1.5 lakh including SIPs worth Rs 25,000. I want to quit working this year. Do I have enough investment?
A – Your total financial asset base is about Rs 5.5 crore spread across MFs + Stocks + SGB (Rs 3 Cr), EPF (Rs 1.5 Cr), PPF (Rs 70 lakh), ULIPs (Rs 30 lakh). Not considering Term Plan of Rs 50 lakh as that will be available post age 65.
Also, your net (starting) monthly expenses are Rs 1.25 lakh per month. Assuming your retirement this year itself at age 57 and taking life expectancy of 85-90, the available corpus of Rs 5.5 Cr+ will be sufficient mathematically speaking.
It is difficult to gauge asset allocation as your Rs 3 Cr in MFs, gold bonds and shares doesn’t provide asset-level detail. But in general, in the post-retirement phase, you need to prudently manage asset allocation of the portfolio with an eye on capital preservation and income generation and another on inflation-beating growth.
Assuming you go ahead and quit your work in the coming month, it is important to identify which instruments will generate a starting regular income of Rs 1.25 lakh per month for you in the retirement years. It can be from a combination of SWP from debt funds (assuming a part of the MF portfolio is positioned in debt), PPF withdrawals.
The money coming from EPF + Gratuity also needs to be prudently managed and you can even consider parking money coming from EPF into bonds, small-savings schemes, debt funds (or a mix of equity and debt funds) to further augment interest income.
In near future, it is advisable to also consider SCSS, RBI Floating Rate Bonds also to secure some interest income. Bank FDs may also be considered for interest income and comparatively better liquidity.
The details of your mutual funds aren’t available. But assuming you aren’t an ultra-aggressive investor and also that you are getting into the retirement mode soon, it is advisable to avoid investing heavily in those schemes/funds which have a high allocation to the non-large-cap space.
It is noted that you have health insurance coverage of Rs 50 lakh and that is sufficient.