I am 47 years old and I want to retire early. I have approximately 2 crores in equities, debt, gold and liquid assets. I also own a house valued at > 2 crores in Mumbai. My liabilities currently are zero. My family comprises wife and daughter. My parents are self sufficient financially and are not dependent on me. My expenses currently are about 12 lakhs PA. Please advise when would be an ideal time for me to retire?

With your current corpus of Rs. 2 Crores accumulated in various assets, you should be able to retire by the age of 50. As regards the value of your house, that should ideally not be taken into account since the house will be used for self occupation and hence caannot form part of the retirement plannnig. When you do retire, make sure that you invest atleast some portion (around 25-30%) of your corpus in equity linked instruments in order to take care of the inflation component post retirement. The investments in fixed income instruments should be planned in a manner where they generate regular cahslfow to take care of your monthly expenses. The equity linked instruments can be used later (after 5 years or so) when you have the need for additional cash flow by taking systematic withdrawals. Till then the growth in this corpus will help take care of inflation in expenses later on.
  • The data  is incomplete and insufficient .For eg . Portfolio YoY returns , Daughter age , education fund provisions , marriage fund provision , your current retirement kitty and lifepartner age to calculate suitable retirement age .
  • When we calculate retirement corupus requirement Self consumption expenses / taxes etc  related data is also vimp.
  • Still we assume if portfolio invested @10% , inflation@6% ,and 60% Of current expenses  PA  post retirement; you can take  a retirement call within 3 years ! (tentatively)
  • Disclaimer - The advise is based upon limited information and assumptions.

Based on the information you provided, it seems you have a teen ager daughter. Assuming you don’t have any other financial goals, your daughter’s graduation, marriage and your retirement income seem to be the goals due to be achieved. Due to lack of clear information about the exact age of your daughter, her career aspirations and the kind of marriage you have in mind for her, it is not possible to do exact estimations (calculations) with regards to those goals. However, setting aside 50 Lakhs for those goals from your 2 Crore Corpus may be sufficient. Remaining 1.5 Cr. may be considered to be available for your retirement income goal. The value of the present own house, which is self-occupied (?) may not be considered towards any goal. Further, you haven’t specified how much more you’ll be able to save & invest monthly, towards your retirement goal from now, until you retire.

 

Assuming the life expectancy till age 85 and you wish to get retirement income equal to your present annual expenses i.e., 1L per month, and you will be able to save Rs.1 L per month for retirement goal from now till retirement, and some other sets of assumption about inflation and rates of return on investment you may be able to retire at age 54. You may build your retirement corpus using Equity and Equity Oriented Hybrid Mutual Funds and arrange retirement income cashflow using Systematic Withdrawal Plans from Debt and Conservative Hybrid Funds.

 

A Google Spreadsheet calculator for you is made available at http://bit.ly/calc2retire which you can download as .xlsx and get to know what is optimum retirement age by changing different variables. Further, as can be seen in the above answer, there are many things that require your inputs. And assumptions have to be fine tuned by experts in a way that suits your situation (for example rate of return on investment). As this is a critical decision of your life, please consult an expert before you decide and also to put in place an investment and withdrawal plan.

I really appreciate your diversified Asset Allocation in your Portfolio and also the strong valuations as on today.,

Retiring early is the dream of almost everyone in this world. I always feel that just an adequate Retirement Corpus may not be the factor to decide the retirement date - but the most important factor to practically think on "What is going to be my Post Retirement Life".

I am sure when we pass through our career with our busy routine, there are many things that we like to do in our life but some how can't do those due to scarcity of time and we store that in our bucket list (To be done at your free time). Many times this bucket list becomes so big that some times we start thinking that, let me retire early so that I can start doing all the stored asssignments of my bucket list - based on my own priorities. Many "Such to do things" authomatically get disappered over the perid of time. But this is one important view Point to think on early retirement.

Infact in my career of almost 4 decads - I have seen the early retirees or even the retirees at 60 get bored/confused with the sudden change of Post Retiremnent life! I appreciate the fact in your case of adequate Nest-Egg developed over a period of time and also you do not have much responssibility except may be of your daughter's marraige etc. Therefore my suggestion would be to use the following startegy to retire early:

With the existing Portfolio Equity segment gradually Move to Mutual Funds atleast with those equities that you think are at stretched valuations.

If you are heavyly into Gold and Liquid Assets - just analyse the "any time requirement" size and if you are at Physical Gold - Move to Soverign Gold Bonds instead of physical one, for many reasons. Liquid Assets are important but not more than... say above your 6 to 7 months requirement at the most 11 months. Try to initiate in deferred annuity plans..with guaranteed Fixed rate payouts with long term basis. Every time you also need to check on Tax Efficiency...And with all this you start thinking or actually persuiting other favoriate things one by one, by taking out some free time from your daily schedule so that gradually you will get the idea about the new lifestyle and think whether you are eager to do that rather than the existing routine. So with all this I think you will be happy to retire at your age 55 or with more confidence at 53 but certainly not before that.. This is my frank opinion Sir!

 

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