Retirement Planning

and Employee Benefits

:Final Examination

SUBMITTED BY
VISHNU KANT BHADAURIA
 Retirement Plan for Dr.Bijoy Shankar Bindopadhyay

Breakdown of Financial Goals:

• Amount Required for Loan Repayments before Retirement:

Car Insurance Loan+ Home Loan= INR 53,21,747

• Insurance:

Dr. Bijoy is already paying for insurance, so insurance only needed to be done for his
wife, assuming the fact that she is taking the same policy which Dr. Binoy is paying,
amount needed for insurance will be: INR 13,20,200

Breakdown:

Goals Payment Time (years) Future Value

Insurance 55000 24 13,20,000.00

Investment Option:

• Life Insurance: As per the expense replacement method there is a shortfall of Rs. 80
lakhs of life insurance cover which should be covered by Max Life Term plan
Insurance for a period of 25 years at an approximate cost of Rs. 20000 p.a.
• Accidental Insurance: Policy of 40 lakhs for self and wife both with a TTD (Total
temporary benefit) of 12 lakhs. The premium will come to around Rs. 4300.
• Health insurance: Individual cover of Rs. 7 lakhs each and Rs. 3 lakhs for their
daughter, the premium for which will be approximately Rs. 15500.

• Higher Education Provision:

Amount Required for daughter’s education after 10 years from now (18Years-8Years)
will be:
Average annual fee of Private Medical College in India= INR 5,00,000
Inflation Rate: 10%
Expected Donation: INR 10,00,000

Final Amount Required: INR 90.07 Lacs

Breakdown:

Goals Amount Needed (PV) Time (years) Future Value

Higher Education 35,00,000 10 9,078,098.61

1
Investment Option :

Mutual Fund- Mentioned in the Investment Break table on page 4, giving a return of INR
7,574,480.34.

Education Loan: Remaining INR 15 Lacs (approx.) will be paid by the daughter in
the future.

• Marriage Fund Required:

Considering the fact that it will require INR 4,00,000 in the marriage with 10%
inflation rate the amount require in future will be-

INR 44.47 Lacs. *50%= INR 22.23 Lacs

(assuming the fact that 50% will be paid by the groom’s family)

Breakdown:

Amount Needed
Goals (PV) Time (years) Future Value
920,000.00 4,00,000 10 2,223,966.93

Investment Option: Start a SIP of INR 37,500 on equity considering the fact that
there is 12% Rate of Return.

• World Tour (After Requirement):

With a 7.5% rate of inflation in the future, amount required for world tour will be:

Breakdown: INR 52.52 Lacs (approx.)

Amount Needed
Goals (PV) Time (years) FV
World Tour 6,00,000.00 30 52,52,973.11

Investment Option:

Refer to Investment Breakdown Table in Page 4

Return from EPF for the amount of INR 70Lacs can be utilised from the same.

2
 • Retirement Fund:

Average Life Expectancy: 73 Years

Tenure for Retirement Fund: 73 Years- 60 Years (Retirement Age)= 13 Years

Retirement Fund=13 Years x Current Lifestyle and Household Expense

Hence with 7.5% of inflation retirement fund needed to sustain the current lifestyle
after retirement will be INR 26.9 CR

Breakdown:

Time Tenure after

Goals Amount Needed (PV) (years) Retirement (years) FV

Retirement Fund 4,75,28,000.00 24 13 26,96,20,358.24

Investment Option:
Reinvest the EMI of Car and Home Loan into Mutual Fund (Equity) with a given 12% rate of
return once the loan is repaid, which will give you a return of approx:

Car EMI 327644

Time 20
Rate of Return 12%
Return INR 2.6 CR

Home EMI 642456

Time 17
Rate of Return 12%
Return INR 3.5 CR

Investment Table on Page can be referred for the returns getting from other investments
which is a total of 8,47,06,059.15 (Out of which 55L will be utilised in World Tour)

Hence, the lifestyle of Dr. Binoy should be decreased in order to have a monetary
sustainability after retirement.

3
Tax Calculation

Income Amount
Inflow 8,500,000.00
After Exception 8,250,000.00
Tax 2,662,500.00
Income after tax 5,837,500.00

Investment Breakdown:

Current Yearly When

Investments Value Invested (years) Frequency Future Value

PPF (both) 20,28,000.00 2,00,000.00 24 one-time 3,10,21,242.61

EPF (wife) 3,50,000.00 120000 24 one-time 70,11,019.13

Bank FD 1,20,000.00 0 24 one-time 9,49,329.98

MF 9,20,000.00 2,40,000.00 10 one-time 7,574,480.34

Total 8,47,06,059.15

Expenses Breakdown:

Expenses Value (yearly)

Outflow 720,000.00

Household and Lifestyle 3,656,000.00

Insurance Expense (Husband) 55,000.00

Car Insurance 16,000.00

House Insurance (fire) 3,000.00

Car EMI 327,644.00

House Loan EMI 642,456.00

PPF 16,666.67

EPF 60,000.00

MF 240,000.00

Total Expenses First Year 5,736,766.67

4
5