A couple planning to retire in 10 years approached Geojit, seeking expert guidance in planning for their retirement. Geojit’s Certified Financial Planner, Gibin John, provides a clear and actionable roadmap to help them gain financial clarity and move confidently toward their goal.
Hi, my name is Ramesh. I am a 45-year-old, and my wife is 44. We have two sons. We are working for a private firm and earning an average monthly net income of Rs. 2,00,000. Our monthly expenses is around Rs. 60,000. We are planning to retire within 10 years. My biggest worry is whether the amount that we have accumulated till now would be sufficient to meet our post-retirement expenses. Our investments are – a fixed deposit of Rs. 45 Lakhs, a savings account balance of Rs. 8 lakhs, and our house is valued at approximately Rs. 5 crores.
We want to know whether our existing savings are enough to meet the expenses during the retirement period. The expected post-retirement cost of living is Rs. 50,000 per month. Please check our existing financial position and advise on a suitable retirement plan.
Gibin John, who is a Certified Financial Planner, replies:
Most individuals begin planning for retirement quite late. The primary reason is a lack of awareness about the importance of early retirement planning. Additionally, many tend to prioritize immediate family goals—such as children’s education, housing, and lifestyle—while unintentionally overlooking their post-retirement financial needs.
As a result, by the time these responsibilities are fulfilled, it often becomes too late to build an adequate retirement corpus.
In your case, however, there are already some focused investments allocated toward retirement, which is a positive start. The next step is to evaluate whether these investments are sufficient and determine what additional planning or adjustments may be needed to ensure a secure and comfortable retirement.
After retirement, it becomes increasingly difficult to continue working and earning income to maintain the same standard of living enjoyed during the working years. During one’s career, financial goals can often be met through loans or external assistance, but such options may not be viable post-retirement due to limited repayment capacity and reduced income flow. Therefore, it is essential that retirement planning be given equal priority—ensuring financial independence and stability in the later stages of life.
You have not mentioned any other financial goals, so we assume that retirement is currently your primary focus. This approach will help in building a dedicated retirement corpus. We also assume that you have already made arrangements to fulfil your sons’ education expenses and other financial commitments. Therefore, the details mentioned in the letter can be utilized specifically for retirement planning.
You are expecting a monthly expense of Rs. 50,000 post-retirement. Considering an annual inflation rate of 6%, this amount will rise to approximately Rs. 89,542 by the time you retire (after 10 years). To sustain your inflation-adjusted monthly expense throughout your retirement years until the age of 80, you will need to accumulate a retirement corpus of Rs. 2.40 crore. This estimate assumes consistent inflation and a prudent withdrawal strategy.
You currently have a balance of Rs. 8 lakhs in your savings account. Out of this, it is advisable to set aside a minimum of Rs. 4 lakhs for emergency requirements, ensuring liquidity for unforeseen situations. The remaining Rs. 4 lakhs can be utilized for any short-term financial needs, such as planned expenses, temporary cash flow gaps, or other immediate goals.
You are left with a balance of Rs. 45 lakh which is not sufficient to meet the post retirement expenses. If this fixed deposit fetches an average return of 6% till retirement this amount will become Rs. 80 lakh. For filling the shortfall of Rs. 1.60 crores, you may invest Rs. 71,500 every month in equity oriented mutual fund till retirement. The amount of Rs. 80 lakh will be sufficient to meet the expense till your age of 61. So, we suggest equity-oriented investment for creating additional retirement corpus. Out of the balance surplus amount of Rs. 68,500 you may invest 40% in equity and 60% in debt or fixed return investment for creating wealth. You may use this amount for sons’ education, foreign trips and other goals.
Finally, I advise you to take a family floater health insurance with coverage of at least Rs. 15 lakh. This will protect your investments from depletion due to unexpected medical expenses.
