Plan As­sump­tions

Business Today - - INVESTING FINANCIAL PLANNING -

In­fla­tion is set at 6 per cent per an­num (for pre­re­tire­ment and post-re­tire­ment phases) Ed­u­ca­tion goals have been in­flated by 10 per cent per an­num.

Med­i­cal in­fla­tion is set at 12 per cent per an­num.

In­come growth rate is as­sumed to be 12 per cent per an­num un­til 2023, 8 per cent per an num dur­ing 2024-28 and af­ter that, 5 per cent per an­num un­til re­tire­ment.

Re­turns are set at 7 per cent per an­num post re­tire­ment.

Life ex­pectancy is as­sumed to be 85 years for Ro­hit and 90 years for Maya.

The re­tire­ment cor­pus re­quired has been cal­cu­lated to pro­vide for ex­penses from 2040 on­wards un­til Maya’s life ex­pectancy. All ex­penses post-2040 are as­sumed to be paid from this cor­pus.

All val­ues taken as in­come, ex­penses and as­sets are cur­rent val­ues.

As­sumed home loan in­ter­est is at an av­er­age rate of 10 per cent for 20 years and the car loan at 11 per cent per an­num for five years. In­sur­ance pre­mi­ums to­wards ex­ist­ing life in­sur­ance poli­cies have been con­sid­ered un­til the pre­mium-pay­ing terms of the re­spec­tive poli­cies.

Health in­sur­ance pre­mi­ums are in­flated by six per cent per an­num.

Sav­ings refers to the funds ac­cu­mu­lated through in­vest­ments and in­cludes monthly net sav­ings, as­sumed to be in­vested with post­tax re­turns of 9.66 per cent per an­num.

Post-tax re­turns as­sumed per an­num: a. Mu­tual funds: Port­fo­lio rates b. EPF/PPF: 7 per cent per an­num

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