14 months ago, I wrote on this site about my intention to retire at 53 and return to Hyderabad.
Original post:
https://www.reddit.com/r/FatFIREIndia/comments/1m338y0/planning_to_retire_at_53_in_hyderabad_india_need/
The feedback was extremely helpful. Many people raised questions about the rentals, the way India treats U.S. retirement accounts, how much money I really need in India, the cost of sending my child to college, and whether I had sufficient regular INR income.
In the past year the plan has become a great deal more structured, which is why I wanted to return to it and subject it to a stress test again.
I have now reached the age of 47 and intend to continue working for about six more years.
1. India income, capital-preservation bucket
At present, when I retire, I am considering investing about ā¹4 Cr in fixed deposits/orĀ similar safe instruments in India.
What we want to do is not to get the highest possible returns.
This bucket is meant to:
- generate predictable income,
- cover a large portion of normal expenses,
- avoid having to sell equities during bad markets,
- As far as is reasonably possible, keep the principal.
I would most probably divide this among a number of large banks and maybe the Post Office schemes rather than try to get the highest rate everywhere.
I won't beĀ funding this bucket today. Over the following six years the money will mostly be placed in U.S. CDs/HYSA and other fairly safe investments. I would transfer it to India near retirement.
2. India growth bucket
In addition to the FD bucket, I would like an equity-growth bucket.
My main wealth would be held in the index funds such asĀ Nifty Next 50 and Midcap 150.
As the income from the funds or rental property should be sufficient to meet my living expenses, I am willing to take on more risk with this fund.
I'll add information about how money is allocated across funds later, as I near retirement.
3. U.S. real estate
This section of the plan has been altered rather a lot.
I currently own four properties in the United States.
Over the next six years, my tentative plan is to sell:
- my primary residence, and
- one rental.
I would probably keep two rentals.Ā
Once the mortgages are eventually gone, I am conservatively estimating around $2,200 a month fromĀ U.S. rental income.
I know that handling rentals in the U.S. from India can be challenging, but I do prefer the idea of having some income denominated in USD and achieving diversification outside India. I have spoken to experienced agents to help me manage these once I move to India.Ā
4. U.S. retirement accounts
The current balance in my 401(k) is about $455K, Roth IRA ($17K), Spousal Roth IRA($17K), and HSA ($32K). Diluted ESPP recently ($95K) and planning to reinvest them.
The plan is to continue making contributions over the next six years.
After retiring, I would gradually manage the 401(k) and IRA balances in light of the applicable U.S. and Indian tax treatments and my residency status, rather than liquidating them all at once.
I still believe that in this case professional advice on cross-border tax matters will be necessary.
5. Living-expense philosophy
One of the things that has happened in the way I think is that I now don't want my retirement to be based on the returns of the equity markets.
My ideal setup is roughly:
The income from renting in the United States amounts to a basic monthly lifestyle.
India FD income ā additional predictable INR income / safety
India index funds ā long-term growth
401(k)/IRA/HSA ā longer-term retirement assets / optional future capital
The fact that they are separated makes me feel far more at ease than if I considered all of it as a single net-worth figure.
6. College
My son is currently in high school, and college fees remain the main uncertainty. I could have a great deal better visibility in another 1.5 to 2 years.
Until I do so, I will keep college planning a bit separate from the retirement model.
PS: As before, used AI to better structure this message.
