1. Wealth Management Retirement Planning

2. Meaning of Retirement. Misconception regarding Retirement Planning The Hard Nuts What is Retirement Planning? Need for Retirement Planning. Estimating Retirement Living Expenses Impact of Inflation Living on Retirement Income Avenues of Retirement Planning Advantage of Mutual Fund Advantage Pension Plans Retirement Blues and its planning Consist of the following

3. ‘Retirement’ in perspective Different in perspectives. If properly planned – can be ‘fun & frolic’- otherwise it could be a “curse” No longer means stop work at the age of 58 or 60 (Slowing down the pace, doing what one wants to do rather than money earning being the goal.) Professionals now have multiple option after they reach 60.( not just employees) Advanced medical facilities have increased average life of a person to 75 years.

4. Misconceptions Regarding Planning for Retirement  My retirement expense will reduce once I retire.  My retirement will only last 10 years. ( retirement age coming down and life is increasing– could be 30 years now)  My pension amount will keep pace with inflation.  There’s plenty of time (?) for me to start saving for retirement.  Saving just a little bit won’t help. (Savings is the basis for PASSIVE income)

5. Eight aspects of retirement you need to plan for:  Timing of retirement  Finding out how much money would be needed  How to create a regular income  Understanding impact of inflation  Rising healthcare costs (Health insurance must- either from spouse/son/daughter/ now bought )  Adequacy of accumulated retirement funds  Retirement housing - may have special characters ( Stay with Sons/daughters becoming difficult – up country /baby sitting/their problems sharing / their feeling of suffocation)  Like Farm house, cattle, more people to live,  Among friends and relatives,  Village atmosphere,  Medical facilities  Present one may not be suitable)

6. What is Retirement Planning?  Saving sufficient fund to live comfortably in retirement years  Need to estimate amount required after retirement  Involves calculating monthly earning  Involves taking into account rate of inflation  to keep aside sufficient fund for contingencies  Further commitments  Gifts and Travel ( pilgrimage / pleasure trips/ visiting Son/daughter in other countries )  Food, Medical, housing, transport etc

7. Need for Retirement Planning  Increased longevity of Indians  Declining Government support  Breakdown of traditional family structure ( JHF was the best Insurance Plan– now does not work)  Increased work life span  More expenses, less income  Protection of spouse/ dependent  Compounding effect of money– not return but expenses galloping)

8. Estimating After-retirement Living Expenses  Spending patterns and where and how you live will probably change  Some expenses may go down or stop. Work expenses - gas, lunches out. Clothing expenses - fewer and more casual. Housing expenses - house may be paid off, but taxes and insurance may go up. Federal income taxes will probably be lower. Special slab for senior citizens, Discount in Travel rates for senior citizens.

9. Estimating Retirement Living Expenses  Other expenses may go up.  Life and health insurance unless your employer continues to pay them.  Medical expenses increase with age.  Expenses for leisure activities.  Gifts and contributions.  Inflation will raise the amount you need to cover your expenses over your probable 16- 20 years in retirement

10. Impact of Inflation  Inflation – a silent killer  Slowly erodes purchasing power of retirement income  Inflation at 7% reduce purchasing power of money to 50% in 10 years  Inflation in education sector – 26%  Inflation in medical sector – 15%  India does not have long term care insurance to take care of old age health expense  No plan covering health, accidental, term and funeral expenses.

11. Food Medical Housing Transportation Clothing Contributions Insurance and other Entertainment 32.5% 11.3% 16.3% 15.4% 4.9% 5.7% 7.7 % 6.2% How an “Average” Older (60+) Household Spends its Money In case Own accommodation, Taxes, repairs, un realizable rent to be considered

12. Living on Retirement Income  Retirees get a variety of tax savings, use them.  Expect fewer senior discounts as boomers retire.  Consider working during “retirement.” (Part time  light)  Invest some of your retirement income for *growth to allow for inflation and  increased health care costs.  Consider 60% stocks and 40% bonds.  Dip into savings with caution, since you do not know how long you will live

13.  Products customized for retirement planning 1.Retirement Plans from mutual funds 2.Pension Plans 3.Post Office Schemes 4.Term Plans (Life Insurance and Annuity)

14.  General category 1.Financial Assets (Not Hedge Funds or Exotic Products (Nifty index based etc) a.Equity i.Stocks ii.Equity Mutual Funds b.Debt i.Fixed Deposits ii.Post-Office Savings Products iii.Govt. Securities iv.Bonds and Debentures

15.  General category continues 2.Real Assets a.Real Estates i.Real Estate Mutual Funds ii.Land, Apartments, Houses b.Gold i.Coins ii.Biscuits iii.Jewellery ( Can enjoy wearing of the same- apart from capital appreciation.

16. Mutual Fund Advantage Investing in mutual funds gives investors eight advantage :  Diversification  Professional management of Investments  Convenient Administration  Lower cost  Flexibility  Liquidity  Transparency  Affordability (Un like Hedge Funds)

17. Advantage Pension Plans  Good channel for retirement investment since withdrawal not encouraged  Annuity for life option ensures that there would be income despite exhausting money in other options  The eligibility of Sec. 80C is extended for annuity investment of up to Rs. 1 lakh per individual  Pension Plans are a safety net for individual’s retirement since the govt. does not offer an old age financial security net. ( PSUs coming-up with Pension plans for already retired people under PF basis by returning back PF drawn)

18. Products for Retirement Planning 1. Retirement Plans from Mutual Funds  Templeton India Pension Plan  UTI Retirement Plan 2. Pension Plans  Reliance Life - Golden Years Plan  Bajaj Allianz – Swarna Vishrani  Birla Sun Life – Flexi SecureLife 2  HDFC Standard Life – Personal Pension Plan

19. Products for Retirement Planning (contd.) 2. Pension Plans (contd.)  ICICI Prudential Life  ForeverLife  LifeLink Super Plan  LifeTime Super Pension  ING Vysya – Best Years Retirement Plan  Kotak Life Insurance – Kotak Retirement Income Plan

20. Products for Retirement Planning (contd.) 2. Pension Plans (contd.)  LIC  New Jeevan Suraksha -1  New Jeevan Dhara -1  Jeevan Nidhi  Max New York Life – Easy Life Retirement  Tata-AIG Life - Nirvana

21. Products for Retirement Planning (contd.) 3. Post Office Schemes  National Savings Certificate  Public Provident Fund  Kisan Vikas Patra  Monthly Income Scheme  Time Deposits  Recurring Deposits  Senior Citizens Savings Scheme

22. Products for Retirement Planning (contd.) 4. Term Plans  Bajaj Allianz Life – Risk Care Economy Plan  Birla Sun Life – BSLI’s Term Plan  HDFC Standard Life – HDFC Term Assurance Plan  ICICI Prudential Life – Life Guard  Kotak Mahindra – Kotak Preferred Term Plan  LIC – Anmol Jeevan  Max New York Life – Level Term Plan

23. Products for Retirement Planning (contd.)  Met Life  Met Suraksha TA  Met Suraksha TROP  SBI Life Insurance – Shield Option 1,2&3  Tata AIG – Assured Lifeline Plan

24. CHALLENGE Design your own RETIREMENT PLAN That hedges against inflation. Liquidity ensured. Loan not a burden  for repayment or penal interest If you r suggestion meets my expectations / solution Rs 100/- as PRESENT Time till next week class.– come out with clear cut plan and explain in the class.

25. Estate Planning Prasad PVLN

26. Objectives Segregating Assets from beneficiaries' Control Trust property is not subject to personal debts of beneficiaries. Beneficiaries cannot deal either with property or its income. Better management by DEPENDABLE persons Objective of Pooling wealth is achieved. To determine heirs/beneficiaries of estate Provide financial support to dependents Planning the way beneficiaries will receive assets Distribution of estate property Executor/co executor who will setele the estate

27. Methods of disposing property Transfer during life time Gifts Power of attorney Selling Transfer at death Will Nominee in specific cases

28. Management of Estate Trusts and Associations Irrevocable conveyance / trusts Beneficiaries Management Distribution of income to the beneficiaries Details of how to MANAGE and conduct “Activity” of Trust

29. Will Intestacy Will preparation Information requirement Attorney Features of will Introductory clause Direction of payments Disposition Appointment clause Tax clause Simultaneous death clause Execution and attestation Witness clause Changing or revoking the will

30. Requirements of valid will Sound mind Freedom of choice Proper execution