Image Source : Business Today
With inflation quietly eroding purchasing power and traditional pensions becoming rare, retirement planning has never been more urgent. A recent feature by Financial Express lays out a simple yet powerful three-step strategy to help individuals build a retirement corpus that can generate a steady monthly income of Rs 1 lakh—without relying on complex financial instruments or high-risk bets.
This blueprint is designed for working professionals who may not have employer-backed pensions but want to retire with dignity, stability, and financial independence.
Step 1: Build Growth Through Equity Mutual Funds
- Allocate a portion of your savings to equity mutual funds, especially index or hybrid funds, to benefit from long-term capital appreciation
- A systematic investment plan (SIP) of Rs 10,000 to Rs 15,000 per month over 25 to 30 years can potentially grow into a corpus of Rs 1.5 to 2 crore, assuming a 10 to 12 percent annual return
- Equity exposure helps beat inflation and builds the foundation for a sustainable retirement income
Step 2: Ensure Safety With Public Provident Fund (PPF)
- PPF offers tax-free returns and capital protection, making it a reliable anchor for your retirement portfolio
- With a current interest rate of 7.1 percent, a 15-year PPF account with regular contributions can accumulate over Rs 40 lakh
- Extend the account in 5-year blocks post-maturity to continue earning interest and maintain liquidity
Step 3: Lock In Guaranteed Income With Annuities Or Senior Citizen Schemes
- Once you retire, convert a portion of your corpus into annuity plans or invest in the Senior Citizens’ Savings Scheme (SCSS)
- SCSS currently offers 8.2 percent annual interest, payable quarterly, and is ideal for low-risk, fixed income
- Annuity plans from insurance providers can offer lifelong monthly payouts, ensuring you never run out of money
Putting It All Together
- A diversified portfolio combining equity growth, fixed-income safety, and guaranteed payouts can comfortably generate Rs 1 lakh per month
- For example, a retirement corpus of Rs 2.5 to 3 crore, split across mutual funds, PPF, and annuities, can yield the desired monthly income while preserving capital
- Starting early and staying consistent with contributions is key to compounding wealth over time
Why This Matters Now
- Delaying retirement planning can significantly increase the required monthly savings later in life
- Inflation-adjusted expenses mean that Rs 1 lakh today may need to be Rs 1.5 lakh or more in 15 years
- This blueprint offers a practical, jargon-free path for professionals to take control of their financial future
Sources: Financial Express, Economic Times, HDFC Life, ReLakhs, Layoffs.fyi
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