Meeting retirements needs with rental.

I am 58,and a chartered accountant. My wife, 55, is employed. We have a son settled abroad. I may work for a few more years and my wife will work until 60. Post retirement, our monthly rental income will be ?1.25 lakh. Are our savings enough to sustain us till 85? We spend ?6 lakh annually on overseas trips.

Sanjay Dave

Since you have created financial and physical assets over the years, that can help you lead a comfortable retired life. Given your current monthly cash flows, your wife can even consider early retirement.

It is possible to make-do with just your rental income, provided it grows at 5 per cent, which is about 2 percentage points lower than inflation. And you don’t have to liquidate your physical assets or draw down your savings in financial assets.

But to sustain 5 per cent growth in rental income on a consistent basis, you will have to spend regularly on maintenance, failing which the pace of rise in your rental income can drop. If the rental income continues to grow at 5 per cent till your wife turns 70, and thereafter falls to 3 per cent, you will have shortfall after she turns 80.

You may have to break up your financial assets to meet the shortfall in your monthly expenses, in case you use your retirement benefits and fixed deposits completely to fund your overseas trips. Your current investments appear more conservative and you can re-work your asset allocation. If you want to leave more wealth for the next generation, you can allocate more towards equity. Since term insurance premium is paid by the employer do continue the same. Even after retirement continue the ULIP until 2026, in order to avail the risk cover.