How this senior couple is travelling the world with their savings

Kumar has an annual review session with his financial planner to check whether their spending pattern had changed,
Kumar has an annual review session with his financial planner to check whether their spending pattern had changed,


  • Kumar and his wife have covered 31 countries across five continents; South America, Antartica are next in the bucket list

It has been 15 years since K.S. Kumar, 70, retired from an active corporate life but that has not stopped him and his wife—Radha K. Kumar, 62—from travelling across India and the world. The couple budgets 60% of their annual expenses for travelling. “We now travel much more than before as we have fewer commitments now," says Radha. 

Kumar, who is based in Bengaluru, says he and his wife have already visited 31 countries across five continents, while South America and Antartica are still in their bucket list. The couple just got back home last month from a trip to Uzbekistan in Central Asia “We travel 4-5 times every year and include multiple international destinations in our travel itinerary," he adds.

Kumar says he was able to retire early, at the age of 54, after his financial planner analysed his retirement portfolio and signalled the go-ahead. By then, the liquidity in his portfolio had also improved. It helped that he was getting good rental income from his real estate investment.

Asset mix

Kumar met his financial planner for the first time in 2005, by which time real estate made up for about 85-90% of his portfolio. The remaining was in debt. There was zero equity exposure. Gradually, more financial assets were added to his portfolio. As of 31 December 2010, Kumar’s portfolio had 56% exposure to real estate, and 32% to debt, while the remaining 12% was invested in equities.

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Lovaii Navlakhi, a Sebi-registered investment adviser (RIA) and chief executive officer of International Money Matters (IMM), recalls that clients who approached him earlier were not so aware about goal-based financial planning or other investment products such as mutual funds.

“In such cases, we would explain to the client that they cannot merely sell a part of their property to meet their financial goals. They needed investments that would be easy to redeem and are also linked to a particular financial goal. Gradually, we introduced them to mutual funds," he says.

As of 31 December 2023, Kumar’s portfolio had 53% exposure to equity mutual funds (including some exposure to PMS), 31% to debt mutual funds, 12% hybrid mutual funds and 3% to gold and jewellery. By 2019, Kumar had sold off his real estate investments.

The retirement goals

In Kumar’s case, the rental income that he was receiving from his second property played a critical role in taking the retirement decision. In 2009, Kumar decided to retire as his job began to demand late-night shifts and extended work trips. The rental income from his second property was more than sufficient to cover his household expenses at that point.

Since he had only worked in one organization throughout his career, his retirement benefits, namely employee provident fund (EPF) and gratuity, had also grown to a sizeable amount. From 85-90% of his portfolio being in real estate, the liquidity profile of his assets had improved, with 44% of his assets being in financial assets around this time.

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Kumar later secured a job in a not-for-profit organization, where he worked till 2018. It was for a short project that paid much lower than his corporate salary but it was deeply satisfying. Kumar says these two income streams—rental income and the renumeration from the news job—not only helped him meet his day-to-day household expenses but also fund his elder daughter’s wedding and also their travel plans without the need to dip into his savings.

His two daughters—Maya and Nidhi—were 23 and 19, respectively, at the time of Kumar’s retirement in 2009. “By this point, all my liabilities were over. The home loan had been paid off. My elder daughter had finished her education and was now working and the younger one was pursuing her chartered accountancy (CA). I had provisioned for her overseas education as well but she didn’t want to pursue that," he says.

As a result, Kumar didn’t need to redeem much of his investments. Both his daughters have now been married off. And he started systematic withdrawal plan (SWP) for his daily expenses only in 2019.

(Graphic: Mint)
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(Graphic: Mint)

Withdrawal strategy

Over the years, Kumar’s corpus has compounded significantly. As things stand, the family’s annual withdrawal rate is anywhere around 3-4% of the entire retirement corpus. The corpus is further broken down into different buckets—liquid, short-term and long-term. The liquid bucket includes cash flow requirements for the next two years and accounts for 10% of the retirement corpus. This also includes provision for the couple’s travel holidays.

For household expenses, a monthly systematic withdrawal plan has been put in place. The remaining expenses are funded through redemptions from the liquid bucket as and when those expenses are required. All these are in short duration and corporate bond funds.

The short-term bucket includes cash flow and goal requirements coming up in the next 3-5 years. This bucket accounts for 13.5% of the entire corpus. These investments are held in hybrid funds, dynamic asset allocation, and equity savings funds.

The long-term bucket includes cash flow requirements and goal requirements coming up after five years. These funds are kept in equity mutual funds and PMS (portfolio management service) to let it compound over the long-term. As the long-term bucket grows, the profits are moved to other buckets, to make sure the overall portfolio’s asset mix is maintained at 60:40 equity-debt allocation.

In the bucketing strategy, the corpus gets rotated each year from long bucket to short bucket and from short bucket to liquid bucket, to replenish the funds for next two years. At any given time, the liquid bucket maintains corpus for two years, short bucket for 3-5 year requirements and long bucket for requirements beyond five years. 

According to his financial planner, Rohini Priyanka of IMM, the medical corpus is also divided into the three buckets as it is unlikely that the family would need such a large sum immediately. “We let the larger part of the medical corpus grow in the long-term bucket," she says.

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Major decisions

Kumar, who was born and brought up in Mumbai, moved to Gurgaon with his family in the 90s after his company was acquired by a multinational engineering firm. In 2004, he got a transfer to Bengaluru . He sold off his Gurgaon flat to buy a house in Bengaluru. Thereafter, he used a mix of down-payment and loan to buy a second property there.

Throughout his career, the health insurance provided by his employer covered all his family members, including his parents. Kumar’s mother died in 2005 and his father in 2017.

Selling his second property in 2019 was a major financial decision. It was yielding 11-15% (on his original investment) in rental income. But by 2019, there was more supply than demand in the Bengaluru real estate market. Besides, he was growing older and did not want the hassle of finding good tenants, entering into lease agreements and maintaining the property.

It was in 2007, when he was 52 years old, that Kumar first toyed with the idea of retirement, but his financial planner told him that he would need to work for a couple of more years before he could retire comfortably.

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Kumar has an annual review session with his financial planner to check whether their spending pattern had changed, any new expenses had to be taken care of, and the investment returns to be targeted to beat inflation. The investment portfolio is also reviewed to check whether it is aligned to the 60:40 equity:debt allocation mix.

A part of the Kumar’s portfolio is kept in equities at any given point in time to give the portfolio an edge to beat inflation. Funds needed for immediate-to-medium-term needs are kept in debt funds and hybrid funds.

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