A reader says, “Thanks for your website. I have been following it for a while, and I thought you could help me with my retirement plan. I also thought my case would be useful to your readers.”
“I am 52 years old, and my wife is 49. I’ve been in the IT industry since 2000 and managed to ride the hot tech wave, receiving ESOPs from Infosys, which changed my life from a lower-middle-class to an upper-middle-class person”.
“I was given ESOP at a 3000 purchase price in 2001. I don’t remember how many times it got split and got a bonus share, but now my adjusted purchase price is 60 rupees. So I exercised my ESOPs from 2005-2009 (even had to borrow from relatives to exercise it)”
“As per the advice from a financial advisor back in 2009, I sold a major part of Infosys ESOPs and moved them into equity funds. I purchased a 3BHK in Hyderabad without much impact on my income”.
“I am still working in another IT company and get 3L per month of take-home pay. Wife earns 50K per month in a freelance job. (No PF, seasonal variations in earnings happen, and she wants to stop when she’s 50).”
“My family portfolio looks like this now. (partly in my wife’s name as she’s also working)
1. Nifty 50 Index fund – around 50L
2. ICICI multicap – around 50L
3. Nippon Small cap – around 30L
4. Kotak emerging equity – around 30L
5. HDFC Balanced advantage – 50L
6. EPFO – 60L
7. NPS – 20L
8. FDs in HDFC and ICICI – 50L
9. Infosys shares (just for emotional reasons) – 15L
My parents live with me now as they both are old and unable to manage alone. They were not very well off, therefore, all they get is 15K per month from their senior citizen deposit. Both of them are enrolled in Ayushman Bharat for 70+ ”
“My only son is studying engineering, and the fee is 6LPA.(This amount is already in his name.) He will finish in 2026 (and I hope he will get placed, too). Right now, considering Trump’s policies, he’s not interested in any foreign higher studies, but I can’t say what he will plan after 2-3 years.”
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“Our monthly expenses are now around 1.5L. I can save 2L per month, and I am doing 50K worth of SIPs in 4 of the above funds. I also get tired of the grind and office politics and want to quit. Do you think I can retire in a year (once my son graduates) and live on my investments?”
The short answer is no. Your initial withdrawl rate is too high (the reader later told me his exact monthly expenses are 1.3L which includes some wants* + needs) is about 4.4% which is way higher than what we recommend with the freefincal robo advisor tool.
*one person’s wants or another persons needs. So this imo.
initial withdrawl rate = annual expenses at retirement divided by total corpus.
I think the reader and his wife should continue to work for sometime to come. At least until the parents pass on. I saw the expenses list and there is nothing extravagant there. So I think the only way forward is to reduce that initial withdrawl rate by increasing the retirement corpus. This will take a few more years.
I would recommend both to plan for a second innings at work (more relaxed, something you live, flexible hours etc) based on your skillset acquired over the years. This will be a big supplement to the income from the corpus and will quickly bring down the withdrawal rate.
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