This blog was updated on 14 December 2020


Senthil sipped a warm cup of Suleimani Chai and watched the coconut trees dance to the wind. “This is life.” he thought to himself. He knew that he owed this moment of bliss to financial planning.

NRI Status

At forty-five Senthil was past the halfway mark to retirement and found himself at crossroads. He had worked in Bahrain for more than fifteen years. He yearned for a quiet retirement in his hometown in Palakkad. But between Senthil’s vision and reality lay many questions like:

      1. Was this the right time to give up his NRI status?
      2. Should he retire after his son settles down financially?
      3. How would he restructure his investments?
      4. Should he risk sacrificing his career by moving to India?

His dreams of Palakkad were frequent and inviting. Retirement seemed both luring and distant. There was an urgent need to plan his retirement. Little did Senthil know that financial planning contained all the answers.



As an NRI in Bahrain, Senthil had little to no tax liability on his income. Senthil’s family led a minimalistic lifestyle and comfortably saved more than 50% of their annual income. In India, he had a few investments and received rental income from an apartment he owned. Although the TDS was high, he was happy with his mutual fund portfolio’s performance. Unlike other NRI, Senthil’s tax situation was straightforward. He filed returns in India every year and even claimed refunds in some years.

Senthil asked his financial planner how his tax situation would change when he returned to his hometown. He learnt that for a couple of years he would have a special status. His financial planner prepared him for the transition from a non-resident Indian (NRI) to a resident Indian (RI).

Step by Step Approach To Retirement

Your 40s are a crucial decade in your retirement journey! The ithoughtplan checklist to navigating your forties contains:

      • Max out Retirement Contributions
      • Insure & Feel Secure
      • Zero Debt
      • Budgeting & Disciplined Spending

Maxing Out Your Retirement Contributions

In your 40s many financial goals will compete for your attention. Like Senthil, you will juggle commitments like sending your kids to college, saving up for a wedding, paying off your home loan, and planning for retirement at the same time. The easy way out is to postpone retirement planning and deal with imminent goals. But this strategy rarely works. Finding out in your fifties that you don’t have enough to retire is a bitter pill to swallow and an easy situation to bypass. Senthil achieved this with a financial plan!

He prioritised his financial goals, spaced them out, and maxed out his retirement contributions to reach a better place. Luckily Senthil started early. So, his money compounded and did all the heavy lifting.

Paying Off Your Loans Faster

A few years ago, Senthil froze his retirement home. Attractive personal loans were available in Bahrain and he used this to pay for his house. Getting to zero debt left Senthil with a sense of accomplishment and relief. More importantly, when his EMIs stopped, his money became free to serve him in different ways. Senthil learnt that the key was to avoid new long-term loans in the years running up to retirement.

Here are three tips Senthil used to quickly pay off loans:

      • Negotiate the best possible rate with your bank
      • Make extra payments every month
      • Shorten the term of your loan

Insurance Matters

Insurance hedges your family from financial insecurities that may arise in your absence. At the peak of your career, you are eligible for maximum life insurance. You should structure your life insurance policy to provide for future financial goals, outstanding liabilities, and income replacement.


Term Insurance for NRI

One of Senthil’s deepest fears was how his family would cope if he wasn’t around to pitch in financially? His wife was a teacher, but they couldn’t live off her salary. Besides apart from their lifestyle expenses, there was the question of the loan and his son’s higher education fees. Through financial planning, Senthil realized that he must insure his life for their sake.

Health Insurance for NRI

Senthil’s financial planner highlighted that his health insurance policy in Bahrain would expire when he left. To prevent a situation where Senthil’s family was uninsured, he suggested purchasing a family floater in India. Senthil locked into a solid health insurance policy early enough and accumulated no claim bonuses for a few years.

The benefits of health insurance in your 40s often outweigh the costs. Health insurance premiums will increase as you age. Remember that they prevent out-of-pocket expenses and ensure that you handle medical emergencies with ease.

Budgeting & Disciplined Spending

Understanding your inflows and outflows will bring more clarity to plan your finances. Senthil realized that he could save more without earning more by just monitoring his expenses and following a budget. A rupee saved is worth as much as two rupees spent.

Once Senthil began tracking his discretionary expenses like eating out, entertainment, shopping, etc. they popped out at him. He realized that being aware of where and how he spent money were steppingstones to creating a perfect financial future. Disciplined spending allowed Senthil to choose what was best for him in the short run and the long run!

When you’re able to save more in your forties, you create flexibility. In fact, Senthil became financially ready to retire early. He also provided more towards his son’s education and felt confident about handling emergencies.

Financial Stability

The focus of financial planning in your 40s should be bringing stability. You can do this by optimising retirement contributions, insuring your biggest assets – your life and health, paying off loans, and increasing your savings potential.

Curious about Financial Stability? Watch our video to know more!

Capitalise on your success in your 40s. Accumulate more wealth and stay true to your goals and financial priorities with a customised ithought financial plan!

Did you know that retirement planning doesn’t end when you retire? Life is full of uncertainties and retirement is no different. Read more about the post-retirement challenge!

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