PLAN OF ACTION

■ Sanjiv’s retirement is over 20 years from now. Health insurance is funded by his employer. Term assurance of `50 lakh each may be taken for about 30 years by the couple which will cost about `12,500 per year.

■ The disposable surplus of `2.4 lakh needs to be invested every year for the next 25 years, until retirement, in the following proportion:

■ Invest `15,000 per month in an SIP of balanced of over the next 25 years. This will in help creating a corpus of `45 lakh at cost (`1.4 crore in value terms if growth is aimed at eight per cent per annum). This will help him to build up the retirement corpus, which can be placed in a debt fund to earn monthly dividends at retirement.

■ A sum of `25,000 needs to be parked every year in a PPF yielding an assumed eight per cent a year interest. Over 25 years, this will translate into a future value of `19.74 lakh, which can be use as a medical and travel expense back-up.

■ FDs can be reduced by `10 lakh and placed in systematic transfer plan of `1 lakh per month by transferring from liquid to equity MFs as the money is needed for children only 10 years later thus providing long-term capital appreciation.

■ Buy unit-linked pension plan, with a 15-18 years horizon. Investing `35,000 per year over 18 years will yield `17.30 lakh. The retirement of the couple will fetch about `50 lakh. The PPF and pension plan can be used to buy an immediate pension policy at retirement.