Charm of early retirement

Aditya (38) is a marketing professional. His take-home monthly income is Rs 1.10 lakh. His wife is a homemaker. The couple has a seven-year-old son. They live in their own house and have a monthly expenditure of around Rs 70,000. In addition to creating a sufficient corpus for his son's higher education and marriage, Aditya wishes to retire at the age of 50. So far, he has accumulated a corpus of Rs 15.3 lakh in equity mutual funds and holds some balance in the Public Provident Fund (PPF). He wants us to make a financial plan for him. Emergency corpus Aditya has a fixed deposit of Rs 6 lakh for emergencies. Although this amount is on the higher side, he can continue with it if it makes him feel secure. The general rule is to maintain an emergency corpus equivalent to one's six-month expenses. The emergency corpus can be kept in a combination of a liquid fund and a sweep-in deposit. It will help him earn higher returns without compromising on liquidity. Action: Use a combination of a liquid fund and a sweep-in deposit for your emergency corpus Insurance Aditya has a term-insurance plan of Rs 1.5 crore. This amount should be sufficient for the family's living expenses in his absence. He also has a health cover of Rs 7 lakh for the entire family. Although the health cover seems adequate for now, it should be revisited every two-three years to make provision for inflation and rising medical costs. He may also consider buying a critical-illness health-insurance po

This article was originally published on April 21, 2021, and last updated on October 19, 2022.