PLAN OF ACTION

Retirement is over 20 years from now. Health insurance is taken care of by employer. Term assurance of `1 crore each may be taken for about 30 years by both the couple which will cost about `25,000 per year. The remaining `2.4 lakh of disposable surplus can be invested in the following manner every year for the next 25 years:

Investments may be carried out in a systematic investment plan of balanced (equity and debt) of `15,000 per month over the next 25 years. This shall help create a corpus of `45 lakh at cost (`142 lakh in value terms if growth is aimed at 8% a year). This will help him to build up the retirement corpus fully. This fund can be placed in a safe debt fund to earn monthly dividends at retirement.

A sum of `25,000 be parked every year in a PPF yielding eight per cent a year. Over 25 years, this will translate into a future value of `19.74 lakh. This money can be utilised as a safe medical and travel expense back-up.

Unit linked pension plan may be undertaken so as to gain on an upside with a 15-18 years horizon. A sum of about `35,000 per year over 18 years will yield a future value of `17.30.lakhs with 8 per cent a year growth.

Retirement of the couple shall fetch about `50 lakh consisting of provident fund , pension fund, gratuity receivable.

The PPF and pension plan can be used to buy an immediate pension policy at retirement. Bank deposits may be continued for use in emergency requirement.