I want to plan for my retirement beyond 2030. Considering inflation at 7% and taking into account my savings so far, my calculation indicates that I will require a corpus of ₹7.7 crore for future expenses. In addition, I require ₹30 lakh to cover my mother’s medical costs and ₹1 crore for my children’s schooling. How do I plan my finances?
—Name withheld on request
We suggest that you set aside the anticipated ₹1 crore for your children’s education and ₹30 lakh for your mother’s medical needs separately, possibly in low-risk investments, you can use your savings for this purpose. You can consider moving any balance to bonds as currently interest rates are at peak and as interest rate heads southward, we anticipate better returns there.
Consider rebalancing your investment portfolio to reduce risk as you reach retirement age. A diversified mix of equity, debt, and other assets in your portfolio can help manage volatility. Move towards more conservative investments every 4-5 years for a regular income stream at reduced risk. We call it a bucketing strategy.
Ensure you have a comprehensive lifelong health insurance coverage for you and your family and maintain a sufficient emergency fund, equivalent to 6-12 months of living expenses, in highly liquid instruments.
Optimize your tax planning for post-retirement income by investing in tax efficient instruments like senior citizen savings schemes.
To ensure a smooth transition of financial assets to your heirs, ensure to make a comprehensive estate plan, including wills and nominations. By addressing these aspects, you can build a robust retirement plan that accommodates your financial goals and safeguards against uncertainties. It’s advisable to consult with a financial advisor to get a tailor-made retirement plan made for you.
Nehal Mota is co-founder, Finnovate.
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Published: 27 Mar 2024, 07:55 PM IST