After the recent supreme court ruling on the Employee Pension Scheme (EPS), EPFO subscribers, as of 1st Sep 2014, can retrospectively contribute 8.33% of their basic + DA to the EPS via a deduction from the EPF. The option to do this has been opened only to a section of employees and is expected to…

A reader says, ” I am 45 years old and am doing well. My company recently shut down operations in India, and I have been offered a hefty severance package. I wanted your advice on generating 10% annual returns ( or the best returns possible)”. “Here is my financial status: Severance package: 70 Lakhs Self-owned…

A reader asks, “I am aged 60 and have just retired. My total corpus is close to Rs. One Crore, but my monthly expenses are slightly over Rs. 40,000. This means my initial withdrawal rate = annual expenses divided by corpus is about 5%.” “This is higher than the “old” safe withdrawal rate estimate of…

Prakash is 35 and wishes to retire by 55. In this case study, we shall find out how he can plan for financial freedom in retirement.  That is, we shall find out how Prakash can derive an inflation-protected income and be financially free after retirement. What is inflation-protected income? This is a retirement income that…

A reader asks, “Can you please write an article on how to decide the inflation rate while planning for retirement?”. This question has troubled me long and hard over the years, and I think I have finally arrived at an answer: “Use the rate that will work for you”! This response may seem arbitrary to…

There is more to retirement planning than beating inflation, investing enough and managing the corpus post-retirement. When we just start investing for retirement, everything seems a blur.  The corpus seems impossible. The amount we need to invest seems impossible. However, the corpus does not seem as steep with time, discipline and some luck. The investment…

Over the last decade, the number of capital market participants (stocks or mutual funds) has increased sharply. Retirement corpora have gradually shifted from 100% fixed-income to higher and higher equity exposure. This shift implies both retirees and advisors must be mentally prepared to face big challenges. An extended rate cut for a good part of…

A reader says that he has realized the importance of retirement planning only at age 35 and his current net worth is essentially zero. He would like to retire by age 55 and wants to know how to go about it. With twenty years to go, there is a good chance of accumulating enough corpus…

A reader asks, “Sir, I have been reading about the safe withdrawal rate in retirement planning. I am, however, surprised that you do not talk about it. Why is this so? Is there a way to calculate my safe withdrawal rate when I retire 25 years from now? I am presently 30″. What is a safe…

Over the last ten years, we have witnessed a big shift in how young earners manage money. Investing is getting popular instead of saving. Many more think of future money management (a better-sounding phrase than “retirement”) earlier than ever. However, not all of them sit down and do a proper retirement planning exercise. Here is…

Many on the verge of retirement ask us, “how much equity should I hold after retirement?” This is a tough question to answer as it depends on the individual, but some general guidelines are possible. Asking this question on the verge of retirement with no prior market experience can be harmful. It is essential to…

A reader asks, “What are the best options for Income bucket investments?” This a reference to our retirement bucket strategy. So we shall list all possible investments suitable for building retirement buckets. A bucket strategy is a post-retirement investment plan to manage inflation-protected withdrawals (income) and investment for the near-term and long-term. So we have…

A reader asks, “I am 50 years old and plan to retire next year. My yearly expense is Rs. 12 lakhs. What is the corpus required to sustain 35 years in retirement?” The Rs. 12 lakhs annual expense (or Rs. one lakh a month) is only for the first year of retirement. For each subsequent…

A reader writes, “There are many investment options for senior citizens. However, today many people retire or are forced to well before 60. Where can such people invest for regular income and cash preservation and wealth creation?” Today even those above 60 are forced to look beyond traditional savings instruments to protect their money from…