[dodge3p]

Originally Posted by KL01toKA03

My current dilemma is whether we should continue in the same path, or whether we should start spending some money on things like international trips or buying another house in Bangalore. I think retirement alone is not a big concern for me. If we move to Kerala and rent out the apartments, we should have enough to lead a comfortable life.

My thoughts on what you described.

• Your kids are still very young, it may take another 10 years to understand the directions they are taking and how much of financial support you have/can to provide
• You have a strong financial foundation, so shouldn't be regretting any expenditure on experiences. Rather than the location, it will be more about how much fun your family had together
• Get a good health insurance, whatever amount you spend on it shouldn't affect you financially
• You or your wife can think of an early retirement, and spend more time taking care of kids and family, this should bring a sense of balance and calmness to everyone in the family
• Another option is to take help from a 'fee-only' financial planner and create a proper goal based plan. This should give your clear direction on "how" and "when" of retirement.
• If contemplating early retirement, do have a solid plan to keep you reasonably busy and active post retirement, otherwise there is a good chance for one to lose sense of existence

[volkchan1]

A large number of folks in Indian IT industry get ESOPs/RSUs from their employer. A significant portion of these are foreign companies, and are awarded in stocks held in brokerage outside India. A growing set of folks are now approaching retirement with much of their assets tied to their companies. Typically, such assets are brought to India on maturity although don't if they believe it will create wealth. There is a third way, Indian laws allow investing $250,000 in foreign assets under FEMA regulations.

Are there folks who have invested their assets abroad for retirement ? The INR has historically depreciated against the USD which means that even if your investment gives you 0 returns, it is still more valuable because of the depreciation. I have diversified by investing in US bonds to mitigate the equity/stock market risk. There are risks involved for example, if you die with US assets, the US government levies estate tax to the tune of 40%, so may not be a good idea to keep this post retirement. Any thoughts/feedback from members ?

[shyampsunder]

Originally Posted by volkchan1

Are there folks who have invested their assets abroad for retirement ? The INR has historically depreciated against the USD which means that even if your investment gives you 0 returns, it is still more valuable because of the depreciation. I have diversified by investing in US bonds to mitigate the equity/stock market risk. There are risks involved for example, if you die with US assets, the US government levies estate tax to the tune of 40%, so may not be a good idea to keep this post retirement. Any thoughts/feedback from members ?

Few things:

1. In the case of RSUs/ESPP, only assets above $60k are subject to this inheritance tax. Simple way to get around this is to share the credentials of your stock broking account such as E-Trade to your spouse or nominees. On death, they can simply login, sell the assets and remit the money back to India. Runs afoul of US law but they don't have jurisdiction when nominee is in India.

2. In the case of LRS contributions, one can get around this by investing in funds that are domiciled outside US but invest in US. Entities like Vested plan to offer these products to Indians soon. Foreign brokers may already offer such plans.

[am1m]

A great example of disciplined investing that has resulted in this BHPian more than achieving, in fact exceeding his retirement goals:

https://www.team-bhp.com/forum/shift...ml#post5937752 (The Mutual Funds Thread)

[jaysheth]

Originally Posted by KL01toKA03

My wife and I have 3 crore term plans each. However, we do not have any health insurance other than what is provided by our employers.I know it is a risky choice, but the rationale is to invest that amount so that I have a good corpus ready in case of emergencies after I retire. Also, if one of my children get a job which has an option where we can be included in their family floater policy, that should also cover a lot of the risks.

While you are generally set and prudent with your finances, this one (not having personal health insurance) is indeed risky. Consider the following:

1. Goodness forbid, if you incur a medical condition requiring say 20 lakhs per annum for say multiple years, your personal policy would cover it year-on-year, for no extra cost, regardless of your employment status (and even after retirement), whereas taking that from your corpus will reduce the corpus by 20 lakhs per annum, year on year. The health care costs would only shoot up with time, 'to add to the injury!'.
   
   
2. Most companies provide health insurance cover for self, spouse and children, and NOT for parents. While some do provide a cover for parents, premiums are very high.
   
   
3. One should think twice before taking any "family floater" policy with old parents. The simple reason is, in case of any family floater policy, the premium is decided based on the age of the oldest insured person, and that costs a lot for the whole family. In case of old parents, one is advised to buy family floater for self, spouse and children, and 'exclude' parents from that, while covering parents through a completely separate policy.
   
   
4. There are several other important aspects on health insurance (and other finance related aspects) covered in my separate post here: https://www.team-bhp.com/forum/shift...ml#post5443785 (The Midlife Crisis Thread)

[volkchan1]

Originally Posted by shyampsunder

1. In the case of RSUs/ESPP, only assets above $60k are subject to this inheritance tax. Simple way to get around this is to share the credentials of your stock broking account such as E-Trade to your spouse or nominees. On death, they can simply login, sell the assets and remit the money back to India. Runs afoul of US law but they don't have jurisdiction when nominee is in India.

I had thought about that too, but here is the catch, the brokerage reserves the right to confirm wire transactions for fraud detection. A while back, one of my wire transaction was flagged and I had to call and confirm my identity before it went through. But with 2FA and transfer to a previously transacted account we should be good.

Originally Posted by shyampsunder

2. In the case of LRS contributions, one can get around this by investing in funds that are domiciled outside US but invest in US. Entities like Vested plan to offer these products to Indians soon. Foreign brokers may already offer such plans.

I don't think we can skirt the LRS limit as it applies to all foreign transactions. Can you please provide more info to back this claim ? By investing in funds domiciled outside US, you can avoid the NRA tax (25%) the US government levies, that's the only benefit I see with this arrangement.

[blorebuddy]

Originally Posted by Ananthang

Obviously I am saving the max I can do, plan my expenses every month, postpone unwanted buying, restrict to 1 credit card EMI at any point of time, diversify investment into stocks, gold, ppf and mutual funds(even though it is small amount in each) and understand money more at 42 which made me raise this point.

Sir, do not have the details of your credit card EMI. However not having any loan/EMI is the first step towards saving/investing and becoming financially independent at some point of time. Hence my suggestion is close this at the earliest. As long as we have an EMI, we are working for the bank rather than for us by paying interest from our earning.

[shankar.balan]

Originally Posted by am1m

A great example of disciplined investing that has resulted in this BHPian more than achieving, in fact exceeding his retirement goals:

https://www.team-bhp.com/forum/shift...ml#post5937752 (The Mutual Funds Thread)

Inspiring indeed. Good to learn from some of these folks who are more sensible and disciplined than others.

[shyampsunder]

Originally Posted by volkchan1

I don't think we can skirt the LRS limit as it applies to all foreign transactions. Can you please provide more info to back this claim ? By investing in funds domiciled outside US, you can avoid the NRA tax (25%) the US government levies, that's the only benefit I see with this arrangement.

I am not referring to skirting LRS. LRS is applicable on all these transactions.

I am referring to inheritance tax of US. By investing in funds not domiciled in US, you get around this problem.

[Red Liner]

For 20 years, one Redditor dedicated themselves to a frugal lifestyle, prioritizing financial security over luxury. Now, at 51 and facing a cancer diagnosis, they wonder: Was it all worth it?

https://in.benzinga.com/news/25/03/4...ion-everything

[pradkumar]

Sequence of Return Risk is one of the most critical, yet often overlooked, risks in retirement planning. The timing of market returns can have a profound impact on how long your retirement savings will last. While average returns are important, they don’t tell the full story. To safeguard against this risk, retirees should consider adopting a Safe Withdrawal Rate (SWR) that takes into account both market volatility and inflation. With a properly calculated SWR, you can better manage your retirement portfolio and enjoy financial security in your life.

https://samasthiti.in/the-silent-thr...f-return-risk/

You can try out their retirement calculator that is specifically tailored to Indian conditions.

https://samasthiti.in/samasthitis-re...nt-calculator/

Interestingly, if you raise the equity share to 60%, the required corpus increases compared to 40%. As per their studies, the ideal equity to debt share is 40:60 after retirement. If you include gold bonds, it becomes 10% gold, 30% equity, and 60% debt after retirement.
They have done a number of simulations to arrive at this ideal share of equity and debt for Indian conditions.
Unlike the west, the Indian withdrawal rate is 3% as per Ravi. As per their studies, if you include 10% gold bonds after retirement, the withdrawal rate increases from 3% to 3.5% as it brings down volatility.

Retirement corpus: How much Indians must save & withdraw ? Detailed Research ft. Ravi Saraogi

https://www.youtube.com/watch?v=h_x-7-qe6RQ

Thanks,

Pradeep

[alpha1]

Originally Posted by Red Liner

https://in.benzinga.com/news/25/03/4...ion-everything

Everyone has a choice to spend money like there is no tomorrow vs being prudent and working towards a scenario where I won't be broke when tomorrow happens.

It is individual choice but if you go by mathematics and probability, then the first choice is quite stupid.

Infact, envisioning future is one of the primary differences between humans and animals.

[DigitalOne]

This is a very useful and relevant video.

https://www.youtube.com/watch?v=ur0fwWTF5g0

Summary:

Inflation-based models of retirement tend to overestimate the expenses during retirement. Actual data from retirees shows that you need much lesser corpus than estimated by inflation-based models. This is because for many categories the expenses come down. For example, transportation, eating out.

The video also presents data of when the expenses go up (60-74) at a higher rate, when it goes up at a lesser rate (75-85), and when it starts going down (85+). Though the data presented is with respect to US, I think the trend will reflect the same for India.

The initial 2-3 years after retirement will see a expense surge as one tends to travel, do house renovation, or buy expensive gadgets but later it will taper off.

Do a "category-based" calculation as the video suggests.

[am1m]

Originally Posted by DigitalOne

Actual data from retirees shows that you need much lesser corpus than estimated by inflation-based models.

This struck me as something borne out by observation as well. I'm sure the majority of the retired couples I've seen growing up and at present have nowhere near as much stashed away as the financial advisors tell us is "absolute minimum" to hope to retire. Yet, they seem to lead their lives in comfort.

Also agree with the reducing expenses aspect. Some things we just get used to (over)paying for, simply because we are earning salaries and don't have the time. My favorite example is eating out- the prices in a city like Bangalore are simply ridiculous and on top of that, it is not even a pleasant experience anymore. Just yesterday, a few friends decided to go to a neighborhood ice cream shop for a quick ice cream. This place has been around for decades and we could just walk in when we were in our 20s and lounge around for a hour or so. Now there was a mini-traffic jam outside, we had to wait in 2 lines, to order and then collect our order, and then wait to find a place to sit. Why pay higher prices for a worse experience over the years?! Too many aspects of our lives in cities have the same tinge.

Obviously one does not want to worry about money or scrounge around when retired. But at the same time does one want to lose the best physical years of ones life accumulating an amount that is not really going to be spent well? I guess there should be a balance, and what that 'balance' is, is going to be different for different people/life situations.

[DigitalOne]

Originally Posted by am1m

Also agree with the reducing expenses aspect. Some things we just get used to (over)paying for, simply because we are earning salaries and don't have the time.

Well said! Actually, post-retirement, we don't even have to cut down on our indulgences. We just have to adjust how we satisfy our indulgences. For instance,

• Go to movies on weekday afternoons - ticket prices are typically half that of weekends; buy the ticket at the window and save on BookMyShow commission. Even the popcorn prices are lower
  
• Go for relaxed weekday lunches/beer. You get neat happy-hour deals.
  
• You have the time. So, take public transport. A BMTC bus ride costs me 1/10th of a taxi ride. Public transport is generally not very crowded during 11AM - 5PM. Travelling to/from railway station/airport by public transport saves considerable amount of money.
  
• If you are fairly healthy and can control your nature's call, buses are a great option for intercity travel (at least in the south) easily for up to 12 hours. Intercity city buses on weekdays are available at bargain prices compared to weekends.