DEVTECH FINANCE
RETIREMENT
PLANNING
WEALTH MANAGEMENT – PART 5
INTRODUCTON TO RETIREMENT PLANNING
• Retirement Planning is the process of determining and
accumulating the retirement corpus one would require to live a
comfortable life after the paid work life ends.
• The ultimate goal of retirement planning is to achieve financial
independence.
OBJECTIVES OF RETIREMENT PLANNING
• Increasing life span coupled with early retirement makes it crucial for us to plan
for a post-retirement life of atleast 25 to 35 years.
• Inflation will erode the purchasing power of money so, cost of living is bound to
increase.
• The risk- taking ability will also go down resulting in a shift towards safer
avenues of investments.
• To enjoy same quality of life after retirement and to cover daily living
expenses.
RETIREMENT PLANNING PROCESS
Decide your retirement age
Set your retirement goals
Calculate the retirement corpus required
Consider inflation rate to assess future value of retirement goals
Assess your current financial situation
Investment portfolio construction
Track & review plan
OBJECTIVES OF RETIREMENT PLANNING
• To cover medical expenses and be prepared for medical emergencies.
• To create regular income sources after retirement.
• To deal with any kind of uncertainities.
• As the Indian economy will mature, the interest rate and stock market return
will continue to moderate resulting in lower return from investment.
ESTIMATE THE RETIREMENT CORPUS
Present Age 35 years
50 years FV of Monthly Expenses
Retirement Age
85 years = 35000*(1.065)^15
Lifespan = 90000
Monthly Expense 35,000
Retirement Corpus
Assumed Inflation rate 6.5% p.a.
= 3.2 crores
Avg. Return (Conservative 8%p.a.
Portfolio)
RETIREMENT CORPUS
• Estimated 3.20 cr. covers only the basic day to day living expenses.
• Along with these one must ascertain expenses like – health insurance
premium, home repairs and renovation, social commitments, vacations etc.
• Expenses that are likely to incur post-retirement also include children’s
education and marriage and any outstanding loan.
• Adding these all expenses ,the reasonable retirement corpus would be
somewhere around 5-10 cr.
ACCUMULATE AND INVEST
• Income rises as one move up the career graph. This will leave lots of spare
cash every year which can be invested towards retirement goals.
• The power of compounding will multiply the corpus.
• Assuming one save 75000 p.m. for 15 yrs. in a portfolio that generates 10%
returns, the accumulated amount would be more than 3 cr. at age 50.
• It can also be started with 45000 investing per month and increasing 10%
every year.
VARIOUS RETIREMENT PLANS TO INVEST
SR. CITIZEN
SAVING
NATIONAL SCHEME MUTUAL FUND
PENSION RETIREMENT
SCHEME SCHEMES
PUBLIC
PROVIDENT
FUND
TRADITIONAL
ATAL PENSION
PENSION
YOJANA
PLANS
EMPLOYEE
PROVIDENT
FUND
RULES TO FOLLOW TO MANAGE FINANCE
EFFICIENTLY
• Portfolio Diversification.
• Investing in accordance with lifecycle stage.
• Excessive debt on credit cards and personal loan should be avoided.
• Mortgage loans may be useful in wealth creation. Ex- Home loan.
• Surrender all high premium and low coverage insurance policy like the
Endowment and Money Back plans. Instead opt for Term plan.
RULES TO FOLLOW TO MANAGE FINANCE
EFFICIENTLY
• Stay away from pension plans that are highly
illiquid.
Invest
• Health insurance is must.
Insurance
• Repay all debts before retirement.
Long-term Assets
• Don’t use retirement money for child’s education
if it can be funded through scholarship, education
loan. Guaranteed Income
• Be extremely patient and disciplined.
WHAT IF YOU FAIL TO ACCUMULATE THE TARGETED
RETIREMENT CORPUS?
• Move to a smaller house
• Move to smaller city where cost of
living would be more economical
• Reverse mortgage your property
• Rent Arbitrage
THANK YOU FOR WATCHING
DEVTECH
FINANCE
