Deenadayaalan wanted to plan his retirement. He is currently running an auto ancillary unit near Chennai.
He wanted to know how prepared he and his family were for his retirement. He wanted to ensure that his retirement income does not depend on his business.
He wanted to have a financially-independent life in the next 12 years, at his age of 65. He is planning to invest ₹60 lakh for the next 12 years in financial assets. He has listed his goals as below.
* Wanted to have a current expense of ₹1.5 lakh per month to be continued after retirement
* His business will be handed over to his son gradually and he will relinquish the control of day-to-day operations. He is planning to continue in an advisory role in the business after retirement.
* Both his son and daughter will get married in the next three-five years. He has set aside adequate funds for the wedding expenses.
* His wife Maya wanted to have ₹5 lakh per annum towards her personal expenses from his retirement for 15 years, in addition to retirement expenses planned by Deenadayaalan.
Deenadayaalan and Maya have an aggressive risk profile aligning with their business interests over the past 25-plus years. As they are planning for their retirement, both of them agreed to build an aggressive investment portfolio — not exceeding 60 per cent into equity, including international exposure, 25 per cent into fixed income investments and 15 per cent into Gold/other assets. The investment portfolio has to be constructed with liquidity as high priority. Real estate is excluded from the proposed investment portfolio.
Review, recommendations
* Their health insurance coverage was analysed, and necessary changes were recommended to suit their health status and financial position.
* It was recommended to invest the annual allocated amount in a growth portfolio for nine years with an expected return of 12 per cent CAGR.
* In the three years prior to retirement, the investment portfolio will be rebalanced to reduce the volatile assets and will be positioned to generate 9 per cent CAGR with consolidation of accumulated assets. This investment strategy will likely fetch them around ₹13.44 crore.
* As they wanted to maintain the same lifestyle, their retirement expenses will be ₹3 lakh at his retirement with an expected inflation of 6 per cent per annum. The family needs ₹9.28 crore for their retirement income for the next 35 years from his age of 65.
* In addition, Maya needs ₹1.3 crore to fund her requirement of personal expenses.
* This leaves a surplus of ₹2.84 crore in the investment portfolio. There was discussion on detailed mathematical analysis to understand why this surplus is necessary and important. There are many economic variables in the plan and an adequate surplus to weather the changes would help the family to have a peaceful retired life.
With the availability of a wide range of options to invest and get withdrawals and/or interest payouts, the solution (for retirement living) is not as easy as one expects it to be. Right asset allocation and liquidity needs have to be ensured during both the accumulation and withdrawal phases. Every decision that impacts the cash flow, needs to be reviewed thoroughly well in advance, to understand the impact it may have on the overall finances. Hence, it is especially important to take enough care in building a corpus higher than what is needed and keep reviewing the strategy of withdrawals to ensure longevity too!
The author is a SEBI Registered Investment Adviser www.financialplanners.co.in)
Published on August 16, 2025
