Subra I am a doctor planning to retire in the next 5 years (I am 63 now) and I have one question to ask : “How many funds should I be invested in and how do I decide what to keep after I retire?

Well, this is a question which many doctors above the age of 65 have asked me in various forms…

Doc, the amount of Rs. 3 crores that you have is just NOT GOING to be enough. YOUR current expenses are Rs. 2L per month (no EMI) and this has to be sustained for the next perhaps 40 years.

Do a simple math – 24L * 30 years that itself is Rs. 7.2 crores. Just the sheer math without including any inflation. Given your current expenditure levels, you cannot retire at this age with this amount of money. Remember your wife is 9 years younger than you and in very good health. This means 40 years is not impossible. That means 10 crores, not even 7 crores.

Yes you can get returns on your corpus of Rs. 3 crores – but assuming that you get about 5% per annum post tax – it is not sufficient even for 2019, forget 2059. This means you will dip into Rs. 3 crores right from the first month/year. That is another big no no.

Of course in a public post like this I do have a limitation of what I can say, but let us look at the options that you have:

Postpone the retirement by 5 years (you will be 73 instead of 68),

Start doing a sip in a Large cap oriented fund like Mirae Asset India Equity Fund – of Rs. 4L per month

Think of withdrawing money from that fund only when you are 75+ which means 12 years from now

Sell off your practice – do not let it just rot and go to dogs. See if your practice will fetch more or the Real estate value is higher.

I am accepting your assessment of the value of your clinic to be of Rs. 5-7 crores.

Assuming that you get Rs. 14 crores for your RE about 12 years later, that too will become your corpus for retiring.

You will have to give up your obsession for Real Estate and bank fixed deposits

Sell off your 2nd flat – you have kept it locked, AND it is not appreciating at all. That will fetch you another Rs. 2 crores

So funnily, I started by saying that you do not have money, but we both soon realized that money was available, but it had to be re-organized better. You need to convert your ‘non-working’ assets to ‘working’ assets.

At your age of 74, 80 and perhaps 84 we will buy 3 annuity policies.

When you retire you will still have your wife’s income as a fall back option.

The other reason why I am asking you to postpone your retirement is that your hobbies box is empty. Completely empty.

Go find a hobby.

Finding the money is my job. I am reasonably competent.

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  1. Hi Subra

    I am a forced to retire Engineer at 47 due to job lost in middle east oil downturn in 2016 with a net worth of around 1 milUSD minus staying house including inheritance.No debts to pay staying in my own house.Even though my networth is small compared to Your other clients I have devised a XL sheet that calculates networth on daily basis. Yes our staying house should not be included in networth. Inheritance can be included if you are sure you will get the property.
    My goal was reached thanks to frugal living in chembur and many of my friends from Cheedha nagar Tambrahms. I could save 85 pct of my salary due to frugal living. Assets divided in 33 pct each of RE /EQ/DEBT. Plan to increase EQ to 50 pct by liquidating RE.Holding on to RE as society might go for Redevelopment and rates pretty good in Chembur.
    I think Retirement planning is not complicated if you have a handle on your finances and are clear in concepts of each asset class and goals.
    My advice is Live frugally save and invest.

  2. At a individual level – Is there is a ‘magic number’ for retirement which a ‘constant’? Suppose it is 20 crores.. That money even in bank FD say, it translates to 1.2 crores p.a @ 6% regular bank interest. That is 10L p.m- and post tax – 7L p.m. even after a non-frugal, but optimum spending, you can put the rest in equity (to cover inflation) and this and it can go on for rest of life.. It is a magic number like a ‘geostationary orbit distance’ in physics which if you escape, beyond that – it just increases the zeros in bank balance without much utility – other than to pursue one’s hobby to make more and more money.

    Beyond the magic number, later on it either ends up as charity (most cases) or ultra-luxury indulgence. At this point, you also find a lengthy list of items that money cannot buy.

    Subra sir, Is there such a magic number, what is it?

    since we are talking about retirement: for a 60 year old + all goals met, with life expectancy 100 years, no other source of income, and leaving out the tails of distribution.
    ps: The money is at a personal/individual level consumption. Not like my business needs it/ my big family needs for the rest of generations… etc. 🙂

  3. The magic number depends on where you put the amount after retirement. If you earn returns above inflation (post tax) you can retire on 1 million USD (7.5 crores) today. Another factor is whet will be your monthly spend and what health covers have you taken for retired life?

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