scorecardresearch

Ask Money Today: Should I retire at age of 41 with Rs 3 crore?

A good health insurance cover for oneself and one's parents is a must

Is retiring at age 41 with Rs 3 crore in kitty a good idea? Is retiring at age 41 with Rs 3 crore in kitty a good idea?

I am 41 years old. I live in my own small flat in Pune. I do not have any pending loan. My parents get a government pension and we live together. My monthly expenses are Rs 50,000. I have no plans to marry or have children. So far, I have created an investment corpus of Rs 3 crore invested as below:
 
Rs 2.3 crore in equities
Rs 20 lakh in debt
Rs 50 lakh in bank FDs
Rs 15 lakh in Public Provident Fund ( PPF).
 
I am clueless about what life expectancy should I assume. Given my financial situation, is it a good idea for me to retire now?
-Tejas Gokhale

 
By Anup Bansal, Chief Investment Officer, Scripbox
 
Tejas, you may take life expectancy to be around 80-85. Therefore, you need to ensure that your corpus is sufficient for the next 45 years, if you are to retire now. Normally, your investment portfolio would grow more than inflation if invested prudently, but to be conservative let us assume that your investments will grow at the same rate as inflation. The estimate for the corpus needed, with this assumption, is Rs 2.7 crore. You can refer to the example below, this has the corpus requirements with various annual returns and inflation numbers, with a monthly expense of Rs 50,000.   

Since your parents get their pension, I assume they are not dependent on you. You also do not seem to have any liabilities so you do not need any life insurance. However, I would advise you to get a good health insurance cover for your parents and yourself, if not done so already. You currently have ~70 per cent allocation to equities, which you should reduce by 10-15 per cent if you choose to retire right now. You may want to conduct a risk assessment exercise for yourself with the help of a Financial Advisor.
 
Based on the information you have provided, you seem to have planned your finances prudently and achieved financial freedom, so congratulations and best wishes for your future endeavours.
 
(Views expressed by the investment expert are his/her own. Email us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)

Also read: Ask Money Today: Can I pay life insurance premium for my wife, daughter for tax deduction?
Also read: Ask Money Today: Are index funds good for long term goals investment?