Asha, 49, is legally separated. She is living with her two daughters in Chennai. She wanted to plan her finances. She listed her priorities as below:
* She has ₹75 lakh as savings in bank account and contemplating buying a house in the next four-five years.
* She is working in a secretarial position at a consulate in Chennai and drawing an income of ₹1.1 lakh per month post tax.
* She is living with her two daughters in a house that belong to her daughters and wanted to move out to her own house when the second daughter gets married in the next four-five years.
* As both daughters are receiving funds after separation, to support their living and lifestyle expenses, Asha’s share of monthly living expenses is limited to ₹25,000 per month and her personal expenses are ₹10,000 per month.
* Asha wanted to build a retirement corpus to support her retirement after her age of 60 to manage her expenses of ₹60,000 per month at current cost.
* Asha is keen to explore investment opportunities to reach her goals comfortably. She understands the risk-reward matrix and likes to opt for a balanced portfolio with 50 per cent into equity investments.
Review, recommendations
* Asha was advised to reserve ₹5lakh as her contingency fund. She has a stable job and the income will increase 7-10 per cent per annum till her retirement.
* With her income growth, she was advised to increase her contingency fund to 12-24 months of her living expenses in the next two-three years.
* Asha is adequately covered for her medical needs with a comprehensive policy provided by her employer. She was advised to opt for a suitable medical policy as personal cover to support her medical expenses after retirement.
* As she is keen to buy an apartment in a community, it was agreed to accumulate funds to buy a studio or a small apartment within the city limits, where it will be easy for her to commute to her office till her retirement. Asha prefers to buy the apartment in a familiar locality; the current cost is estimated as ₹75 lakh with an estimated cost increase of 8-10 per cent, she needs to have ₹1.1-1.2 crore in the next five years.
* She was advised to set aside ₹40 lakh from her savings towards house purchase along with monthly investment of ₹30,000-. This will fetch her ₹90-96 lakh in the next five years. She needs to opt for a housing loan to fund the deficit which needs to be closed before her retirement in the next five years.
* She is expecting ₹1.25 crore as her retirement benefits at her age of 60. With her savings of ₹30,000 per month and current investment of ₹30 lakh in suitable investments, she will be able to accumulate ₹1.68 crore in the next 10 years.
* With this investment plan, she will be able to fund her retirement at current cost of ₹48,000 per month. This translates to ₹93,000 per month as her first-month retirement income.
* She needs to compromise on her lifestyle or housing needs, which she will decide in the next five years.
* She was also advised to explore other retirement home options as the savings and investments will not be sufficient to manage her medical expenses, if any, after retirement. Managing medical expenses is crucial after retirement, as the medical insurance may not cover certain expenses. She was advised to invest her expected income growth in the next 10 years suitably to build adequate corpus.
While it may not be easy for aspiring retirees to envision the retired life in its entirety, which is usually longer than expected, this calls for trimming of expectations on the comfort factor. It is more so, when there are other priorities like buying a house, like in this case.
The author is a SEBI Registered Investment Adviser www.financialplanners.co.in
Published on June 21, 2025