I am happy I got many responses in the comments page and others on wassup n twitter…we surely have a lot of thought going into retirement.

Let us get the basics right. He needs Rs. 40k a month. Realizing more income than that is useless – he will have to pay income tax, unnecessarily. So I suggested about Rs. 25L of FD in his wife’s name which will give them Rs. 200,000 a year. This cash flow (coming in quarterly is enough). His pension is not an army pension – it is an non-indexed pension from a post retirement job.

Selling the house has enormous advantages – he saves about Rs. 7000 on maintenance, and Rs. 6000 being paid to a servant for cooking, sweeping, ….etc. If he moves to a senior citizens home, he spends much lesser. There is a common eating facility which is expected to cost them Rs. 300 a day per person for all the meals. That translates to Rs. 18,000 without the worry of handling a cook/maid etc. So selling off of the house when they are alert makes sense.

Do you know it is almost impossible for a patient to sell off a property in India today? You have to go to the Registrar for signing…and I can assure you it is painful.

So the house goes. No, it is not so much about cashflows as it is about convenience. Also if the house is sold they will not change their mind after 5 months saying….”I want to go and try living there again”. So closing doors is kind of psychologically useful too.

So the house goes into a 5% bond…and creates some more cash flow…of Rs. 1.5L for the H and W (house is in joint names) and this money can be used for investing in an ELSS if needed.

This puts a lot of cash in their hands, but some of it will be used to buy a senior citizen home. They are looking at a new unit – buying and furnishing will cost them Rs. 1 crore – and that leaves a lot of liquidity, and reduced monthly outgo.

Also 73 is a good age to move into a senior citizen house with geriatric care. At the age of 80 you might find it more difficult to make new friends. Here he will get 10-12 years to make friends. Also in Pune he is buying a brand new property – and he is paying the maintenance for 10 years in advance. Even though he is not a Maharashtrian he is happy eating that food day in and day out. His wife wants to run the kitchen – for at least a few days a month.

Not changing much in his portfolio. Just making sure that all his funds are in GROWTH mode. Will withdraw slowly as and when needed if at all. In such a way that he does not pay any capital gains. Whatever he withdraws will go into a liquid fund.

As soon as the fund has say Rs. 50L it will go to LIC and become an annuity…why create more assets – he might as well spend a little more.