1. Very often, a person's retirement corpus comprises of only fixed income products like Employee Provident Fund, Public Provident Fund, Senior Citizens Savings Scheme, Fixed Deposits and a Pension Fund.
2. It is well known that returns from these products are insufficient to beat persistent long-term inflation, thereby depriving the retiree from enjoying the same lifestyle of his earning years.
3. Leading a forced frugal life, with the fear of outliving his retirement corpus thereby losing his financial independence, can be physically and mentally catastrophic.
4. However, a conscious reconstruction of his fixed income products could enable him to live a happy retired life.
5. He should deposit his EPF amount in the Growth option of a Monthly Income Plan (MIP) debt fund, which will enable his money to beat inflation while allowing him liquidity when he needs money in a contingency.
6. On maturity of his PPF, he should deposit it in his bank's flexi-deposit account and withdraw his monthly requirement needs only from it till he exhausts it gradually in a few years.
7. He should retain his SCSS account and use it as his emergency fund.
8. His Pension policy will be handy for additional income.
9. He should utilize his FDs to start 3 weekly SIPs in:-
(i) A Multicap fund for long-term growth,
(ii) A Largecap ELSS fund for tax savings,
(iii) A Midcap fund for higher returns.
10. He should start withdrawal of his monthly requirement from (i), (ii) and (iii) only after 2+, 3+ and 5+ years resp.
11. Thumb rule for an ideal inflation-beating perennial retirement investment:-
a) Corpus should be 20-25 times of your annual retirement need,
b) Annual withdrawal should be 4-5% of the corpus.
12. Converting low-interest FDs into growth-oriented mutual funds with higher returns would help to enrich the retirement corpus in the long-term.
13. However, annual expenses would still need to be reviewed from time to time to sustain it for 25+ years.
14. Alternatively, earning kids could gift amounts to bridge any expense gap or to increase the retirement corpus.
15. An additional income stream like rental income could also be handy.
2. It is well known that returns from these products are insufficient to beat persistent long-term inflation, thereby depriving the retiree from enjoying the same lifestyle of his earning years.
3. Leading a forced frugal life, with the fear of outliving his retirement corpus thereby losing his financial independence, can be physically and mentally catastrophic.
4. However, a conscious reconstruction of his fixed income products could enable him to live a happy retired life.
5. He should deposit his EPF amount in the Growth option of a Monthly Income Plan (MIP) debt fund, which will enable his money to beat inflation while allowing him liquidity when he needs money in a contingency.
6. On maturity of his PPF, he should deposit it in his bank's flexi-deposit account and withdraw his monthly requirement needs only from it till he exhausts it gradually in a few years.
7. He should retain his SCSS account and use it as his emergency fund.
8. His Pension policy will be handy for additional income.
9. He should utilize his FDs to start 3 weekly SIPs in:-
(i) A Multicap fund for long-term growth,
(ii) A Largecap ELSS fund for tax savings,
(iii) A Midcap fund for higher returns.
10. He should start withdrawal of his monthly requirement from (i), (ii) and (iii) only after 2+, 3+ and 5+ years resp.
11. Thumb rule for an ideal inflation-beating perennial retirement investment:-
a) Corpus should be 20-25 times of your annual retirement need,
b) Annual withdrawal should be 4-5% of the corpus.
12. Converting low-interest FDs into growth-oriented mutual funds with higher returns would help to enrich the retirement corpus in the long-term.
13. However, annual expenses would still need to be reviewed from time to time to sustain it for 25+ years.
14. Alternatively, earning kids could gift amounts to bridge any expense gap or to increase the retirement corpus.
15. An additional income stream like rental income could also be handy.