PLAN OF ACTION

Retirement is sometime away but risk on life and health is high due to advancing age for him and his family. Term assurance of 50 lakh may be taken for about 20 years ` which shall cost about 20,000 per year. ` Disposable surplus of 11 lakh every year can be placed ` in the following proportion for the next 18 years:

Invest 60,000 per month over the next 18 years in a ` systematic investment plan of balanced ( equity and debt). This will help in creating a corpus of 130 lakhs at cost ` (` 291 lakh in value terms if growth is aimed at 8% a year). This will help him to plan for his retirement needs in full.

A sum of 1.5 lakh be parked every year in a PPF yielding ` 7.60 per cent a year. Over 20 years, this will translate into a future value of 70.65 lakh. This money can be ` placed in a debt fund from the age of 61- 70 years and systematically withdrawn for later on needs in life.

An incremental sum of 2 lakh saved every month can ` be pooled to buy tax- free bonds from the secondary market which can be used for his daughter’s higher education ( 8th year to 14th year from now) and marriage.

EPF accumulation of 25 lakh and gratuity at retirement ` will fetch him about 1 crore at retirement. PPF can be ` used to buy an immediate pension policy at retirement.

Bank deposits may be reduced to 10 lakh and the rest ` be used for purchasing tax free bonds with maturity of about 10- 15 years.