A couple approached Geojit seeking expert guidance in planning for their retirement and creating corpus for their son’s education. Geojit’s Certified Financial Planner, Gibin John, provides a clear and actionable roadmap to help them gain financial clarity and move confidently toward their goals.
I am 41 years old, working for a private company, and earning a net salary of Rs. 80,000. My wife is also working and has a net salary of Rs. 85,000. Our monthly living expenses are about Rs. 55,000, and we pay an EMI of Rs. 50,000 towards our home loan, which will end in July 2028. We have a monthly investible surplus of Rs. 60,000. The following are details of our assets.
Rs. 2,50,000 in Savings Bank account
House worth Rs. 1.25 crore
Shares worth Rs. 12 lakh
Gold worth Rs. 45 lakh
Fixed Deposit of Rs. 7 lakh
Health Insurance with Rs. 6 lakh cover
Expected retirement benefits of Rs. 25 lakh
Our goals include accumulating funds for our son’s education and our post-retirement life. We will need Rs. 20 lakh by 2034 for our son’s education. I plan to retire at the age of 50 and aim to build a retirement corpus of Rs. 2 crore. We would like to know if our current savings are sufficient to meet these goals, or if adjustments are needed.
Gibin John, who is a Certified Financial Planner, replies:
Your current age is 41, and you are planning to retire at the age of 50, which is after 9 years. An analysis of your investments shows a well-balanced mix of equity and debt assets. Your important goals are to build a corpus to meet the expenses of post-retirement life and your son’s higher education, both of which are planned for the same year.
Before setting aside funds for your financial goals, I suggest it’s important to build a contingency fund to cover unexpected expenses. Your current monthly living expenses are Rs. 55,000, and your EMI is Rs. 50,000. Therefore, you should aim to set aside at least Rs. 3,00,000 to cover a minimum of three months’ expenses. You can earmark the existing balance of Rs. 2,50,000 in your savings account and Rs. 50,000 from your fixed deposit for this purpose.
The total monthly income of your family is Rs. 1,65,000. After accounting for living expenses and EMIs, you have a surplus of Rs. 60,000. You have budgeted Rs. 20 lakh for your son’s higher education, which is planned for the year 2034, nine years from now. Considering 8% education inflation, you will require Rs. 40 lakh on the goal date. To achieve this goal, you should invest approximately Rs. 21,500 per month in low-risk investment options such as debt mutual funds or recurring deposits.
You are planning to accumulate Rs. 2 crore by the time you retire. You will receive Rs. 25 lakh as a retirement benefit, and the remaining Rs. 1.75 crore can be accumulated through prudent investments. Your current living cost will rise to Rs. 93,000 per month if 6% inflation is considered. If you want to maintain an inflation-adjusted lifestyle until the age of 80, you need to accumulate around Rs. 3 crore at the time of retirement. Currently, you have accumulated Rs. 12 lakh in shares and Rs. 45 lakh in gold. If these investments grow at 12% and 8% respectively, the shares will be worth Rs. 33 lakh and the gold Rs. 90 lakh at the time of retirement. Including the retirement benefit, your total accumulation will be Rs. 1.48 crore. You still need to accumulate Rs. 1.52 crore over the next 9 years. If your future investments yield 12% annual growth, you will need to invest Rs. 80,500 per month until retirement.
However, the available surplus amount that can be allocated toward this goal is Rs. 38,500 per month, which will help you accumulate another Rs. 72.5 lakh. After completing the EMI, you can allocate Rs. 50,000 toward this goal for around 6 years, which can accumulate approximately Rs. 45 lakh at 8% growth. Since the investment period is short, it is advisable to invest in low-risk instruments. The total retirement corpus you can accumulate is Rs. 2.65 crore. This amount will be sufficient to meet the current living expense of Rs. 50000. I suggest you also start a family floater health insurance of a minimum of Rs. 5 lakhs.
