The next
feasible step after planning your retirement corpus is to plan to earn the
desired regular income post retirement. It is possible that the expected amount
collected on your last working day may not match with the required sum but the
bigger issue is to leave that sum unplanned for later years. So, the work of
calculation does not stop at retirement but begins on retiring.
There are various regular income options to support the financial
requirements of every individual, some of the popular investment route are:
a) Calculate the tax liability on your
collected corpus
The amount to be
received on your retirement is never on one particular date, it is received
over a time frame of year or so. Like your EPF proceeds are credited in month’
time of your retirement or your PPF gets credited on 1st week of
April. The Bank FDs and other bank products have their own unique maturity
dates. So, the best possible manner to understand your tax liability is to break
out the receivable maturity funds as per financial year and taxability.
Asset
|
Tax
Liability
|
Public Provident Fund
|
Not taxable
|
Employee Provident Fund
|
Not Taxable (beyond five years of withdrawal)
|
Bank FDs
|
Taxable
|
Shares Dividend
|
Not taxable
|
Equity Mutual Funds
|
Not taxable
|
Tax free Bonds
|
Not taxable
|
Gold ETF
|
Taxable
|
b)
Study
your asset list
Around the
retirement period, it is best to identify your assets as income earning assets or
assets held as only for investment value. It may be possible that you hold many
Bank FDs but till now it were only a easy way to invest or a PPF seen as a tax
saving haven. But now post retirement it is necessary to make a call on whether
the asset should be held for any longer. If not, the same can be used to
generate regular income going forward. Like holding a huge portfolio in shares
is not helpful for retired individual as the dividend yield is very low in them.
Similarly, holding a real estate property if you are not the end user of it is
not a good idea if yields no rental income. Also, many people have huge amount
of physical gold or ETFs in their portfolio so unless it is earmarked for some
end use, it will yield no value to you except adding to your balance sheet totals.
c)
Study
Your Various Investment Options
Monthly Income Plans – Mutual Funds/ Post
Office
|
Senior Citizen savings scheme
|
Bank/Corporate FDs
|
Pension Funds – Via annuity
|
|
Lock In
|
No such Lock in
|
Five years lock in
|
Tenure based lock in. Bank FDs can be broken at a
premature date
|
Lifetime
|
Taxability
|
Taxable
|
Taxable
|
Taxable
|
Taxable
|
Minimum & Maximum Fund Requirement
|
No Limit
|
Maximum – 15 lakhs each individual
|
No Limit
|
No limit
|
Expected rate of return ( average based on current
returns)
|
7%
|
9.2%
|
9% -9.5%
|
6% -7 %
|
- Beyond this a contingency fund providing for any huge medical emergency should be created and kept ready, via investing in liquid mutual funds.
- Also, if you have a empty property it can give good rental yield (although the average rental yield is around 3-4%) if you don’t intend to sell the same due to emotional value attached to it or want to leave it for your nominee.
d) Transfer of assets to divide the income
receipts
At the early
stage of your working life make sure that required investment is divided between you and
your spouse so the tax liability also gets distributed among both of you on
retirement. This ensures that you fall under low tax liability or may enjoy a
nil amount of tax due to higher tax slabs for senior citizens (above 60 years).
Regards
Saarthi Financial Planners
www.saarthifp.com\
#FinancialPlanning #FP #CFP #SaarthiFinancialPlanners #SaarthiFP #SaarathiFinancialPlanners #SaarathiFP #SarathiFinancialPlanners #SarathiFP
Regards
Saarthi Financial Planners
www.saarthifp.com\
#FinancialPlanning #FP #CFP #SaarthiFinancialPlanners #SaarthiFP #SaarathiFinancialPlanners #SaarathiFP #SarathiFinancialPlanners #SarathiFP
