Securing retirement one step at a time

Retirement is not just a mere vacation; it's the long-term holiday you work your entire life to afford. But without the right corpus, it’s like heading to a tropical paradise without a booking. Are you packed and ready for the endless holiday of your dreams?

For the age group of 40-60, retirement planning often becomes a mix of anxiety and ambition. You might feel behind in your savings or unsure of where to invest what you've accumulated. The reality of inflation, healthcare costs, and maintaining a desired lifestyle post-retirement brings a plethora of challenges. But it's never too late to strategize.

How to build that “Corpus” which sets you free?

Building a retirement corpus isn't just about putting away chunks of your income; it’s about wise investments, understanding financial markets, and leveraging the compound interest magic. Here are the key strategies:

1. Assess Current Financial Health: Begin by looking at all the money you owe. Make a list of all your liabilities - short-term and long-term. Once you do, list all your investments and the money they made for you over the past 5 years.

2. Set a Clear Goal: Envision your retirement lifestyle. Whether it's Rs. 10 crore you aim for or Rs. 3 crore, a sum that aligns with your dreams, and setting a goal is your starting point.

3. Income plan: Against the list you made of all your assets, write how much money it can give you per month/quarter i.e. write rental amount against property, interest amount against FD, dividend/SWP amount against equity etc. Here is the format you can use:

4. Rebalance: If the desired income level does not match your expense expectation, move some of the assets from low interest to high return segment.

5. Build Inflation Asset: Once you reach your desired income level and allocation, plan for SIPs that provide additional corpus at every 5-year interval in retirement. The sooner you start, the more you benefit from compound interest. This corpus would help you splurge in retirement based on your lifestyle.

6. Regular Review: Regular but infrequent review is the key. You must review your portfolio once or twice a year but not focus on everyday movement. Remember to think in terms of the next couple of years, what would be the desired returns rather than extrapolating the past returns.

7. Tax Planning: Don’t let taxes erode your savings. Invest in tax-saving instruments like PPF, NPS, and ELSS funds to reduce your taxable income and enhance your retirement savings.

How to break the discussion of Real Estate vs. equity vs. PPF Vs FD etc?

There is no one fixed answer. You should put money where you feel comfortable - ideally, it should be a mix of all.

Real estate gives good growth but low rentals, fixed deposits give fixed interest but no growth and taxes even on the accrued interest and equity give good growth but lots of up and down.

• Some of the options to consider in Fixed Income are Corporate FDs, Market Linked Debentures, Private Bonds;

• Some of the options to consider in Equity Schemes are energy-focused mutual funds, muti-asset mutual funds etc.;

• Some of the options to consider in Stocks are Powergrid, Schaeffler, Maruti, Polycab etc - leaders in their respective domains.

As you approach your well-deserved break from the workforce, make sure you're stepping into retirement with confidence, not caution.

Build discipline, build wealth; enjoy health and wealth. Just like you keep a doctor nearby for any health issue, keep a financial advisor also nearby to discuss wealth issues. Chart your course to a comfortable retirement, where life is rich, and money is merely a means to enjoy it.

We are looking to connect with like-minded people who want to plan a comfortable retirement. Kindly connect us with any of your references.

Warm regards,

Tejas Lakhani,
CA and a finance professional