RETIREMENT PLANNING AND

EMPLOYEE BENEFIT

PRESENTED
BY GROUP 1
 CLIENT DETAILS
NAME RAJIV CHAUDHARY

AGE 25

EXPECTATIONS CLIENT WISHES TO RETIRE AT AN EARLY

AGE OF 45 AND SHIFT TO A HILL
STATION AND BUY A SMALL PROPERTY
THERE.

OCCUPATION: SALES MANAGER IN A BANKING FIRM,

FOR PERSONAL LOAN DEPARTMENT
 INCOME
• MONTHLY SALARY: Rs 31,357

• AFTER TAX VARIABLE PAY ( COMMISSION): Rs. 15,000 ON

QUARTERLY BASIS

• BASIC SALARY: Rs. 12,000 PER MONTH

• DEARNESS ALLOWANCE: 40% OF BASIC (60% INCLUDED FOR

RETIREMENT)

• OTHER ALLOWANCES: 20% OF BASIC SALARY

• PF DEDUCTED: 12% OF BASIC SALARY, CONTRIBUTION AT

 SAVINGS AND ASSETS
• CASH/ SAVINGS ACCOUNT : Rs 50,000

• LIQUID ASSETS : Rs 1,83,670 (AVERAGE RETURN FOR LAST FIVE

YEARS 15% PER ANNUM)

• PPF : SAVINGS FOR LAST TWO YEARS Rs 10,000 PER ANNUM



• BIKE (ASSET)
MARKET PRICE Rs. 85,000
(Purchased two months ago after down payment of Rs. 17,000 ; remaining financed
@ 13%pa monthly compounding for a term of 18 months)

 EXPENSES

• MONTHLY EXPENSES : RS 23,000 (Including rent of Rs. 7,500)

• DINING OUT/ PARTIES/ GIFTS : Rs 10,500

• TRAVELLING EXPENSES : RS 2,700 p.m. (Reimbursement from

employer Rs. 1,500)
•
 ASSUMPTIONS

• RATE OF INTEREST ON EPF : 9%

• CURRENT PROVISIONS OF ACT RELATING TO EMPLOYES

BENEFIT WILL NOT BE CHANGED

• INCOME TAX RATE: 30%

• BASIC SALARY EXPECTED TO GROW AT 10% ANNUALLY

• INFLATION: 10% ANNUALLY

•
• Note :We have assumed that he has already covered his insurance
risk.
 GRATUITY
Ø
Ø ASSUMING HE IS COVERED UNDER GRATUITY ACT , PERIOD
OF SERVICE BEING 20 YEARS.


SALARY AT THE AGE OF 45

BASIC: Rs. 80,730

D.A : Rs. 19,375

COMMISSION: Rs. 33,637

TOTAL LAST DRAWN SALARY : 1,33,742

 CALCULATION : ( 15*133742*20) / 26 = 15,43, 179.90



 SINCE THE LIMIT IS Rs.10,00,000 GRATUITY EXEMPTION:

Rs. 10,00,000



 PROVIDENT FUND
• SPECIFIED LIMIT: 6,500

• EMPLOYEE CONTRIBUTION : 780 ( 12% of 6,500)

• EMPLOYER CONTRIBUTION : 237 (3.67% of 6,500)

• CALCULATED: Rs. 7,12,635 (@ 9% )

• EPS : 362662 ( only employer contribution of Rs.543)

•

 NEED ANALYSIS
• RETIREMENT CORPUS REQUIRED AT THE AGE OF 45 :
2,95,55,832

• PRESENT MONTHLY EXPENSES (23,000 – 1,500 –

7,000) : 14,500

• LIFE EXPECTANCY : 65 YEARS

•
• POST RETIREMENTS EXPENSES (EVERY MONTH) :
1,06,810
•
 THIS RETIREMENT CORPUS IS REQUIRED TO SUSTAIN FOR
 ACCUMULATION AT THE TIME
OF RETIREMENT
• GRATUITY : 10,00,000

• PROVIDENT FUND : 7,12,635

• PPF (@ 70,000 p.a. for 20 years) : 33,00,284

• PENSION ( after 20 years @ 9% ) : 3,62,662

• LIQUID FUND( assuming fund is invested for 20 years @ 15%

p.a. ) : 30,06,042
 CASH FLOW

• MONTHLY INCOME (31,357 + 5,000) : 36,357

• MONTHLY EXPENSES (23,000 – 1,500) : 21,500

• NET CASH FLOW (36,357 – 23,478 ) : 10,679

TOTAL ANNUAL SAVINGS ( 1O,679 * 12 ) = 1,28, 148



•
OUR RECOMMENDATIONS
• REDUCTION OF DINING EXPENSES : 7,000
( due to this monthly savings will increase to 17,679 and
annual savings would result to 2,12,148)

• INVEST 70,000 PER ANNUM TO PPF

• LOAN EMI FOR 18 MONTHS (FOR BIKE @ 13% PER

ANNUM) : 4,178


AFTER 18 MONTHS THE SAME AMOUNT IS BEING

INVESTED IN SIP FOR REST 18.5 Years ( @ 15%)


• SIP FOR 9,000 PER MONTH (EQUITY FUND @ 15% FOR

20 YEARS )
• SIP FOR 2,000 PER MONTH ( @ 15% FOR 20 YEARS ) FOR
PURCHASE OF HOUSE WORTH 30 LAKHS.

• SINCE SALARY IS INCREASING @ 10% PER ANNUM WITH

GROWING ANNUITY AFTER 20 YEARS IT WILL TURN OUT
TO BE ( INVESTMENT IN FIXED DEPOSIT ) : 27,51,000 (
After deducting 30% tax )
•
• 500 PER MONTH @ 3.5% BEING INVESTED IN POST OFFICE
SAVINGS ACCOUNT

•
Therefore from the above
table we can conclude
that he is still left with a
surplus of Rs. 26,00,000
RETIREMENT CORPUS NEEDED AT THE AGE OF (2,95,55,832)
45
GRATUITY RECIEVED 10,00,000
PROVIDENT FUND 7,12,635
PPF 33,00,284
SIP ( for 18.5 months@ 15% ) 49,35,091
SIP ( of Rs 9000 per month for 20 years @ 15% ) 1,34,75,155
SIP ( of Rs 2000 per month for 20 years @ 15%) 29,94,478
SALARYfrom growing annuity ( invested in fixed 27,51,000
deposit @ 9 % after tax)
LIQUID FUND ( of Rs. 1,83,670 for 20 years ) 30,06,041
THANK YOU!!!

• AAYUSH
BHARGAV
• NAMITA
PAREEK
• SHRUTI SINGH
• SANDEEP
SINGH
• HARVEEN