Financial plan for retiree

POSTED BY Phani ON January 15, 2012 11:05 pm COMMENTS (7)

My father has retired last year and has invested his retirement benefits in the below manner.

a).Post office senior citizens savings scheme – 5 lakhs
b).3 lakhs FD for 2 yr 9 months at 10.25% interest
c).4 lakh FD for 33 months at 10% interest
d).2 lakh FD for 1 year at 10.05% interest
e).4 lakhs FD for 1000 days at 9.75% interest
f).2 lakhs FD for 18 months at 9.75% interest
g).SBI Life insurance Smart Performance plan for a one time premium of Rs.75000
h) SBI Shubh nivesh whole life plan for a sum assured of Rs.3 lakhs with yearly premium at Rs.104496 to be paid for 5 years
i).Liquid cash in savings account – 2 lakhs

He gets a monthly pension of Rs.17000 , lives in own house and gets a rental income of Rs.12000
Please advise how his investments can be altered so that he will get the maximum return.As he is a retiree,he wants to do low risk investments only.


7 replies on this article “Financial plan for retiree”

  1. Dear Phani, Please contact SBI life & demand a chart mentioning paid up value if you opt to stop prem. now. What ‘ll be the surrender value if you opt to pay prem. for next 4Y & surrender it after completing 5Y?

    Please post these details to finalize what we should do to this policy?

    Once the policy matter is discussed & finalize we may concentrate on bank FDs. I do know that interest rates ‘ll not be the same & your father ‘ll be at loss after completing the initial years. As of now, no need to panic for bank FDs.



  2. Phani says:

    Hi Ashal,

    Thanks for the advise on opening the SIP’s in HDFC Prudence.Will surely act on it..

    The Shubh nivesh policy can be surrendered after 5 years..he started the policy last year and paid nearly Rs.1,08,000 as the premium…it is yearly premium(hence i’ve put 9000 as monthly expenses)…

    Yes..all his FD’s are cumulative.I have one concern regarding the bank FD’s…once the FD’s get matured, how should we plan to invest since he will get lumpsum amounts of more than 2 lakhs each time[ and the interest rates might be low at that time ]?

  3. Dear Phani, please contact SBI life ins. co. & check if possible to make that shubh nivesh policy paid up. By the way, how much prem. till date your father have paid in that policy?

    The pension amount + rental income is sufficient for current expenses for next 3-4 years adjusted for inflation if we discontinue that Shubh Nivesh policy.

    With an assured pension of 17K Rs. & near assured rental income of 12000 Rs., your father may afford to divert a small amount in hybrid funds like HDFC Prudence. Instead of investing that 5K RD, My choice ‘ll be to go for 5K mly SIP in HDFC prudence. Keep this SIP active for next 4-5 years. The Eq. portion of HDFC Prudence, ‘ll provide the kick in return from it’s Eq. part & thus an over all kick ‘ll be there to his portfolio.

    Regarding the Shubh Nivesh policy, If some how your father is able to stop the prem. either through paid up or just stopping the policy right now. The 9K mly prem. can be invested in to another hybrid fund with lower Eq. exposure this time, HDFC MIP LT plan.

    I assume all those bank FDs are cumulative type hence no comment as of now.

    Please share your views for the same.



  4. Phani says:

    Hi Ashal, it was a mistake to invest in the two SBI policies , without properly analysing them. Both the policies can be surrendered only after 5 years.:-(

    Coming to your other questions, his current monthly cash outflow is Rs.26000.This figure includes

    a) Rs.12000 for household expenses,
    b) Rs.5000 for a recurring deposit of 1 year and
    c) Rs.9000 for the premium for his SBI shubh nivesh policy

    My parents also have a floater health insurance coverage of 3 lakhs(2 lakhs for Dad and 1 lakh for mom) from New India Assurance.They dont have any other insurance coverage.

    Also, most of his FD’s are short term ( max of 1000 days) how can he maximise his return?

  5. Dear Sri, the query was from dear Phani not from me. I do hope you intend to answer him not me. 🙂



  6. Hi ashal,

    i guess your father has utilized the extra percentage(0.5-0.75%) given for senior citizens ,If not please create them accordingly 🙂

    Its better to invest some amount for health insurance if he don’t have one as that is the best place to put your money at this age 🙂 So that any problem in health will not affect his savings.,

    I don kw abt the SBi plan “SBI Shubh nivesh whole life plan ” mentioned above as the figures given are not correct according to me 🙂 You have mentioned like sum assured is 3Lakhs and yearly Premium is 1Lakh ., even its 10k its not advisable to park such a huge amount in insurance if you dont want such a huge cover ., If its not a term insurance then better go for it than any money back/endowment plan


  7. Dear Phani, Please do tell me the logic of investing in the 2 SBI policies first & then we ‘ll discuss the remaining issues?

    Also you forget to quote his mly expenses figure to zero down the mly return figure for him. Please quote the same while replying for the above said SBI policies?



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