Retire from Work Not from Life

Mr. Siri is retiring today at the age of 60, from a MNC after serving for 35 years.  He has been always a money saver and  collected a moderate retirement corpus of Rs. 50 Lakhs,  after fulfilling all his financial obligations toward his children. Today both his sons are married and well settled in their own professions.

Mr. Siri along with Mrs. Siri stays in his own house in New Delhi. Their aspirations in retired life are travelling abroad, spending  time for devotional activities, funding charitable organisations etc.

Mr. Siri is quite satisfied about the Retirement Corpus he has generated. However, looking at hooping inflation and his probable life expectancy of 80+, he has some concerns too..

  1. How long his money will suffice for him and his wife?
  2. If he puts all his money in investments like bank Fixed Deposits, SCSS, post office. Will his money beat inflation? Or he will end up eating his capital?
  3. Does being retired mean he must not put any money is risky investment class like equity?
  4. His income generated thru investments puts him under higher tax bracket, is there a way out for better tax management?
  5. How can he make sure that after him, legacy is transferred to next generation in an amicable way?

At this juncture, Mr. Siri needs an unbiased financial advise which would focus on his own lifestyle and aspirations. He  should take guidance from a Fee based Financial Advisor to plan his retirement financially. One of the most important services financial advisors offer their clients is  a well-structured and sustainable retirement income strategy.

Along with the help of Financial Advisor, Mr. Siri should first identify his household monthly cash outflow requirements. He should also calculate extra funds required to fulfil his special aspirations like world travel, charity etc. An analysis of health risk cover would help Mr. Siri to realise in case of medical emergencies how much financial risk is covered by his health insurance vis-a-vis how much he has to bear himself. Part of his corpus can be identified for such Emergency Fund accordingly.

At the end of this exercise, Mr. Siri would be sure of amount of corpus required for his wife and himself to live the desired retired life. Now, he can think of investments.

Every asset class has its own Risk and Return relationship. Lower the risk, there is a more likelihood of capital protection but lower returns.

Before taking investment decisions, Mr. and Mrs. Siri must analyse their own risk tolerance abilities. Based on Siris Risk Profile, Financial Advisor would suggest a suitable and sustainable retirement asset allocation strategy to generate necessary income. He would also guide Mr. Siri on taxation aspect of these asset classes to address his concern of saving tax.  Depending on changes in Siris priorities, asset rebalancing would also be suggested.

With a controlled and monitored approach of Retirement Strategy, Mr. Siri would be able to leave a legacy for next generation. Wealth Disbursement after Mr. Siri’s life must be planned as per his wish. Financial Advisor would guide him on estate planning thru Will Preparation or Private Trust Formations as the need be.

The risks in retirement are different from the risks an investor may have faced while accumulating retirement assets, and often a retiree needs help to thoroughly understand and evaluate these differences. A financial professional’s guidance can be of great help throughout this process..

With Financial Advisor on his side, Mr. SIri can  proudly say ‘ I am retired from work and not retired from life….’.

Qualification : B.Sc.(Statistics), MCA, CFP
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Mrs. Shilpa Wagh, is Chief Financial Coach at Wagh Financials. She is one of very few FEE ONLY Financial Life Planners. She is a Certified Financial Planner from Financial Planning Standards Board,... Read More

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