Many people make two mistakes while planning their finances. The first common mistake is presuming that equity mutual funds provide a 12%  (or more!) return and utilizing that figure to calculate the necessary investment amount. Regrettably, this approach entirely disregards asset allocation and the reality that investing 100% in equity is not feasible. Even those…

Recently, a reader asked, “Can the freefincal robo advisor tool handle my situation? I am 40 years old and have Rs. 1 Crore cash in the bank. I have no other investments (don’t ask why; it’s a long story!). I want to retire by age 55. How should I invest this Rs. 1 Crore for…

Here is how one can use a safe withdrawal rate (SWR) to gauge the health of our retirement corpus. This discussion also answers broader questions like, ‘When can a retiree take risks after retirement?’ and ‘How much equity exposure can I have after retirement?’ Note:  In this day and age, using a proper retirement calculator only…

A 35-year-old reader wants to know if he can retire comfortably by age 55 and what he should do to achieve this. He is married to a homemaker aged 30. When he reaches 55, his wife will be 50. So, we shall plan for retirement income until she (the younger spouse) reaches 90. Therefore, he…

Many individuals close to retirement are unfamiliar with buying government bonds vis RBI Retail Direct and how it differs from purchasing a life insurance pension plan*. We discuss the essential differences in this article. In this article, a life insurance pension plan refers to an immediate annuity plan, not a deferred one. Always avoid deferred…

This article discusses income laddering (aka annuity laddering) in retirement planning and how to go about it. There are two extreme options in retirement planning: one where the corpus is managed in a diversified portfolio, and an increasing income is withdrawn from it as required. This is known as the bucket strategy.  We had earlier…

Let us discuss a retirement plan for a 28-year-old who wishes to retire by age 50. These are the following inputs and assumptions used in the retirement calculation. Age 28; Retirement age 50; Life expectancy age 90; Monthly expenses Rs. 40,000; Current corpus is practically zero; Inflation before retirement: 7% and after retirement 6%, Return…

What does the term “safe withdrawal rate” mean in retirement planning? The safe withdrawal rate, or SWR, refers to the amount of money that can be withdrawn annually from a retirement fund in the first year of retirement. This rate is calculated by dividing the initial withdrawal amount by the total money available for retirement….

I have been making retirement calculators for 14 years, which are some lessons I learned. My first calculator was made around 2010 or so. I shared it with PV Subramanyam (Subra of subramoney.com) for feedback. Like everyone else using a retirement calculator for the first time, I, too, was scared to see the corpus I…

A reader says, ” I am a salaried IT professional, but I have only started planning for retirement very late. I am investing very strongly (35% into investment, 30% into EMI), but I fear I might not have a safe retirement – and am too late. I want to keep my expenses the same after…

In response to our article, Ten mistakes to avoid while planning for early retirement, a reader wants to know how he can plan to be productive after retirement. For completion, point 1 from the above article is reproduced here. 1. Have a clear post-retirement engagement plan. Retirement (early or normal) does not mean a complete cessation of…

A reader says. “I live with my mother, and I am 52. However, I have a corpus of only one crore invested in equity. I retired in 2019 as vice president. My monthly expenses are 30k. Is my corpus enough?” This was in response to “How much do I need to retire in 2024?”. Let…

A decade or so ago, when someone wanted regular income, you assumed they were senior citizens or had retired early. That is no longer the case. With many shifting from a salaried existence to freelancing or enterprise, the need for regular income from accumulated wealth as a cushion has become important. Let us discuss the…

A reader says, “I’m 48 years old, unmarried, and the only son of dependent parents. I work in a MNC IT firm and own two houses (in Mumbai and Bengaluru) and a car. I have term and medical insurance for the 3 of us”. “Unfortunately, a big mistake I have made is having very little…