Vaishali and her husband, both aged 59, plan to retire in the next couple of months and wanted to put in place a plan and strategy for their income. Vaishali wanted to understand how different financial instruments can help her conservative lifestyle and investment strategies.
After a detailed conversation with Vaishali and her husband Rajdeep, it was understood that they may need ₹6 lakh per year towards their living expenses. Their living expenses cover food and groceries, clothing, entertainment, travel, communication and social activities. The weighted average inflation based on the past three-four years of expenses marked for retirement is around 6 per cent per annum excluding health-related expenses.
Rajdeep wanted to have a separate basket of investments for health-related expenses in addition to the health insurance coverage they carried. They had opted for adequate and comprehensive health covers based on their lifestyle, family history and current health status.
They currently have ₹4 crore in their retirement savings. Their objective is to generate tax efficient income in a conservative manner. Their primary objective is to protect their retirement life with the limited corpus and if possible, pass on the wealth, if any, available to their children.
They reside in an apartment in Hyderabad, purchased three years ago and carry no outstanding liability.
Review, recommendations
* Their health insurance was reviewed and found to be adequate. They were also advised on the home insurance.
* It was advised to keep three years of expenses as emergency fund, considering their conservative approach to investments.
* They were advised to invest ₹3 crore in a carefully-chosen fixed income instruments to generate regular income in a tax-efficient manner. The income generated from it will be used toward the living expenses and the balance will be invested in a portfolio of equity mutual funds suitable to their risk profile towards long-term wealth creation.
* It was explained to them that with an investment of ₹3 crore in fixed income portfolio, the income will be less than their inflation-adjusted expenses after 25 years. Hence, it is very much essential to keep the expenses in check.
* It was advised to invest the balance over and above their lifestyle expenses in a long-term portfolio consistently. It was also demonstrated to them that by investing 75 per cent of the surplus after the expenses, they could protect their retirement income till their age of 100.
* It is essential to have flexibility towards expenses especially at the beginning of the retirement. The remaining 25 per cent of the surplus from regular income, which is not invested, will provide the necessary cushion for the incremental lifestyle needs. This amount will come down over the years as inflation increases their basic expenses.
* Rajdeep’s concern on the long-term healthcare needs fund will be addressed by investing ₹60 lakh in a mix of a portfolio with liquidity, safety and return framework. Long-term healthcare is a tricky need, where the portfolio should be liquid enough to address the needs at any given point of time with ease of handling the investments. As the medical costs inflation is always higher with lot of uncertainties on the individual’s health status, the returns generated would also play a significant part.
It is reassuring to understand that the corpus saved and invested for many years is enough to generate regular income in a more conservative manner which exceeds the planned retirement lifestyle expenses. Relaxed taxation by the government is an additional benefit to enjoy the life ahead. But the expenses do not remain static over the next 25-40 years of retirement life. Planning for bigger gifts, extensive travels will erode the wealth carefully built over the working years. There should be a balance between long-term comfort and initial years of euphoric expenses. Longevity risks are higher with limited corpus, and the retiree should always focus on dignified retirement life for longer period of time.
If you choose a conservative investment path, it’s wise to match it with a simple lifestyle and clear safety nets for health and emergencies. The risks associated with retirement living are multi-fold and there are a few which are not under our control like longevity and inflation. Hence enough care should be given while formulating a strategy to understand how the retirement corpus is effectively put to use, especially when there is limited potential to increase the corpus.
The author is the Principal Officer, Ploutus Asset Services LLP, a Registered Investment Adviser firm
Published on September 27, 2025