I comment on the case of a pharmacist who aims for an income of R$4,000 – 02/14/2024 – Market

The financial cycle of individuals can be divided into five major stages. Care in properly planning the first three phases reflects what can be achieved in the last two. Most people only worry about the final stages when they reach the third phase, that is, without time to take any action. I will explain below whether this was the case with Joana.

The phases of an individual’s financial cycle are: formation, accumulation, consolidation, retirement and distribution.

Note that the first three stages are the moment in which the investor creates, grows and consolidates his wealth. Thus, with the result of this heritage, he can fulfill his desire in the last two stages.

Therefore, the first three phases are the ones in which we all have the most control. The last two are almost a consequence of everything we built.

Joana did a good job during the first stages. At this point, she wants to understand if the effort was enough to cover her desire in the last two stages and how much she can extract from it.

In one sentence she sums up what she wants: “My goal is to cover expenses for a daughter who goes to college, travel and retirement.” But it also details, and it is these details that we will analyze.

Joana aims for her financial assets to be sufficient to provide an income of at least R$4,000 per month in addition to what she should receive from the INSS. She also wants to help her daughter with college and also leave part of her assets to the young woman.

Joana is a pharmacist, 57 years old and due to retire in two years. When retiring, she must receive the equivalent of R$5,000 per month from the INSS.

Currently, she already takes advantage of the monthly income benefit from a private pension. The value of this additional income is R$3,500, but the benefit ends in 15 years.

After this income ends, Joana wants her financial assets to be able to provide an income of R$4,000, replacing private pension.

Throughout her career, she managed to accumulate a financial asset of R$1 million.

Like most Brazilians, most of this sum is invested in products referenced to the CDI. For the past two years, this has been a good attitude. But I question whether this will be suitable for the long term.

It already has a start date, deadline and income amount during retirement. Therefore, the safest thing for her at this moment would be to lock in income with federal public bonds in the Treasury Direct program called Renda + 2040.

With R$304,000 invested in this title, she can guarantee an income of R$5,000 for 20 years, starting at age 73. Therefore, until the age of 93, she would have guaranteed a higher amount of monthly income than she wants.

The start of payment of income through the Treasury bond will be one year longer than the period in which the private pension ends payment. However, this is not a problem, as she still has more than double that amount to invest.

She can divide the remaining amount into two installments.

The first would be to pay for her daughter’s college education. To do this, it must invest in CDBs referenced to the IPCA that mature each year. Detail on the amount to invest and where to next.

Considering that college costs R$5,000 per month, she will invest four CDBs for her daughter’s education with maturities in one, two, three and four years. For the first year’s monthly fees, she can keep R$60,000 in the LCAs she already invests.

Currently, it can invest in CDBs with a yield of at least IPCA+6% per year. Therefore, she would only need to invest R$57 thousand in the CDB that matures in the first year, R$54 thousand in the second, R$51 thousand in the third and R$48 thousand in the fourth.

Therefore, with R$270,000, she can guarantee an investment of R$5,000 per month in the young woman’s education.

There was still R$426 thousand left. With this value, she has two alternatives.

The first would be to increase your monthly income perspective by investing in more Renda+ Treasury bonds like the one mentioned previously.

Alternatively, she can invest in Treasury Income +2060 bonds. Thus, she will leave her daughter an income of more than R$20,000 a month for 20 years. This income should start close to when your daughter will be retiring. Soon, she would also be guaranteeing a retirement for her daughter.

Therefore, the savings efforts that Joana made throughout the first three stages of her financial life cycle are more than enough to cover her desire for the last two stages.

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