How this senior citizen couple is able to travel the world every year
Kumar and his wife have covered 31 countries so far; South America and Antartica are next in their bucket list
It has been 15 years since K.S. Kumar, 70, retired from an active corporate life but that has not stopped him and his wife—Radha K. Kumar, 62—from travelling across India and the world. The couple budgets 60% of their annual expenses for travelling. “We now travel much more than before as we have fewer commitments now,” says Radha.
Kumar, who is based in Bengaluru, says he and his wife have already visited 31 countries across five continents, while South America and Antartica are still in their bucket list. The couple just got back home last month from a trip to Uzbekistan in Central Asia “We travel 4-5 times every year and include multiple international destinations in our travel itinerary,” he adds.
Kumar says he was able to retire early, at the age of 54, after his financial planner analysed his retirement portfolio and signalled the go-ahead. By then, the liquidity in his portfolio had also improved. It helped that he was getting good rental income from his real estate investment.
Asset mix
Kumar met his financial planner for the first time in 2005, by which time real estate made up for about 85-90% of his portfolio. The remaining was in debt. There was zero equity exposure. Gradually, more financial assets were added to his portfolio. As of 31 December 2010, Kumar’s portfolio had 56% exposure to real estate, and 32% to debt, while the remaining 12% was invested in equities.
Lovaii Navlakhi, a Sebi-registered investment adviser (RIA) and chief executive officer of International Money Matters (IMM), recalls that clients who approached him earlier were not so aware about goal-based financial planning or other investment products such as mutual funds.
“In such cases, we would explain to the client that they cannot merely sell a part of their property to meet their financial goals. They needed investments that would be easy to redeem and are also linked to a particular financial goal. Gradually, we introduced them to mutual funds,” he says.
As of 31 December 2023, Kumar’s portfolio had 53% exposure to equity mutual funds (including some exposure PMS), 31% to debt mutual funds, 12% hybrid mutual funds and 3% to gold and jewellery. By
2019, Kumar had sold off his real estate investments.
The retirement goals
In Kumar’s case, the rental income that he was receiving from his second
From real estate-heavy portfolio, to liquid portfolio 15
Retirement corpus: 3-bucket strategy 2 years of expenses
10% of corpus Short duration funds* Corporate bond funds* 85 32 3-5 years of expenses
13% of corpus Hybrid funds, equity savings, dynamic asset allocation
As each year's expense is incurred, the lower bucket keeps getting replenished property played a critical role in taking the retirement decision. In 2009, Kumar decided to retire as his job began to demand late-night shifts and extended work trips. The rental income from his second property was more than sufficient to cover his household expenses at that point.
Since he had only worked in one organization throughout his career, his retirement benefits, namely employee provident fund (EPF) and gratuity, had also grown to a sizeable amount. From 85-90% of his portfolio being in real estate, the liquidity profile of his assets had improved, with 44% of his assets 12 56 5-year-plus expenses
77% of corpus Equity mutual funds Target maturity funds on entire corpus being in financial assets around this time.
Kumar later secured a job in a notfor-profit organization, where he worked till 2018. It was for a short project that paid much lower than his corporate salary but it was deeply satisfying. Kumar says these two income streams—rental income and the renumeration from the news job—not only helped him meet his day-to-day household expenses but also fund his elder daughter’s wedding and also their travel plans without the need to dip into his savings.
His two daughters—Maya and Nidhi—were 23 and 19, respectively, at the time of Kumar’s retirement in 2009. “By this point, all my liabilities were over. The home loan had been paid off. My elder daughter had finflow 12 32 3 53
Post-retirement goals
Travel: Four-five times a year, with multiple international trips. Household expenses: Grow corpus to meet inflation-adjusted expenses
Medical corpus for any healthcare emergency ished her education and was now working and the younger one was pursuing her chartered accountancy (CA). I had provisioned for her overseas education as well but she didn’t want to pursue that,” he says.
As a result, Kumar didn’t need to redeem much of his investments. Both his daughters have now been married off. And he started systematic withdrawal plan (SWP) for his daily expenses only in 2019. Withdrawal strategy
Over the years, Kumar’s corpus has compounded significantly. As things stand, the family’s annual withdrawal rate is anywhere around 3-4% of the entire retirement corpus. The corpus is further broken down into different buckets—liquid, short-term and longterm. The liquid bucket includes cash requirements for the next two years and accounts for 10% of the retirement corpus. This also includes provision for the couple’s travel holidays.
For household expenses, a monthly systematic withdrawal plan has been put in place. The remaining expenses are funded through redemptions from the liquid bucket as and when those expenses are required. All these are in short duration and corporate bond funds.
The short-term bucket includes cash flow and goal requirements coming up in the next 3-5 years. This bucket accounts for 13.5% of the entire corpus. These investments are held in hybrid funds, dynamic asset allocation, and equity savings funds.
The long-term bucket includes cash flow requirements and goal requirements coming up after five years. These funds are kept in equity mutual funds and PMS (portfolio management service) to let it compound over the long-term. As the long-term bucket grows, the profits are moved to other buckets, to make sure the overall portfolio’s asset mix is maintained at 60:40 equity-debt allocation.
In the bucketing strategy, the corpus gets rotated each year from long bucket to short bucket and from short bucket to liquid bucket, to replenish the funds for next two years. At any given time, the liquid bucket maintains corpus for two years, short bucket for 3-5 year requirements and long bucket for requirements beyond five years. According to his financial planner, Rohini Priyanka of IMM, the medical corpus is also divided into the three buckets as it is unlikely that the family would need such a large sum immediately. “We let the larger part of the medical corpus grow in the longterm bucket,” she says.
Major decisions
Kumar, who was born and brought up in Mumbai, moved to Gurgaon with his family in the 90s after his company was acquired by a multinational engineering firm. In 2004, he got a transfer to Bengaluru . He sold off his Gurgaon flat to buy a house in Bengaluru. Thereafter, he used a mix of down-payment and loan to buy a second property there.
Throughout his career, the health insurance provided by his employer covered all his family members. Re-balancing
Kumar has an annual review session with his financial planner to check whether their spending pattern had changed, any new expenses had to be taken care of, and the investment returns to be targeted to beat inflation. The investment portfolio is also reviewed to check whether it is aligned to the 60:40 equity:debt allocation mix.
(For an extended version of this story, go to livemint.com)
Kumar met his financial planner in 2005, by which time real estate made up for about 85-90% of his portfolio