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options in retirement planning: one where the corpus is managed in a diversified portfolio, and an increasing income is withdrawn from it as required.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 The safe withdrawal rate, or SWR, refers to the amount of money that can be withdrawn annually from a retirement fund in the first year of retirement.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…

Can we build a well-diversified retirement portfolio – a retirement basket as PV Subramanyam of subramoney.com would say? Such a portfolio should be robust enough to handle all types of expenses in retirement – everday expenses for a comfortable life, discrenationary expenses to splurge a little from time to time, emergencies, both planned and unexpected…

A reader asked, “What is your idea of a comfortable retirement?” A discussion. The answer is subjective and subject to significant change especially if we are far from retirement. Perhaps only those investing for at least a decade will likely ask this question. ‘Comfort’ implies something well above a basic requirement. So let us first…

A reader says, “What is the corpus needed for a 50-year-old to retire immediately if my monthly expenses are Rs. 50,000?” Let us compute this using the freefincal robo advisor tool. This provides an accurate estimate compared to approximate calculations using spreadsheet formulae. The robo tool can also include three post-retirement income streams.  It also…