Everyone wants to live a comfortable life after retirement, get a fixed amount of money in their account every month and not have to worry about money. But the big question is that if after retirement you want ₹ 50,000 every month i.e. ₹ 6 lakh in a year, then how much money will you have to save for this now? A new report has assessed different investment options keeping in mind a retirement period of 40 years (assuming one lives till the age of 100).
FD
If after retirement, you want to meet your expenses every month only with the help of Fixed Deposit (FD), then you will have to save about ₹ 2.30 crore in advance. That means if your annual expenditure is ₹ 6 lakh, then approximately 39 times of that amount should be deposited. This is because the interest received on FD is not much. On top of this, there is also the impact of taxes and inflation, due to which the real income further reduces. Therefore, FD is safe, but to rely on it, it is necessary to prepare a big fund.
life annuity
In life annuity, you get fixed income throughout your life in exchange for a lump sum investment. But to get ₹6 lakh annually, a fund of about ₹2.35 crore is required i.e. 40 times the annual expenditure. There is stability in this option, but a large amount has to be invested in the beginning.
swp
Systematic Withdrawal Plan (SWP) is a strategy of mutual funds, in which you can withdraw a fixed amount from your investment every month. According to the report, a corpus of around ₹1.60 crore could be sufficient for the ₹6 lakh annual requirement i.e. 27 times the annual expenditure. In SWP, your money remains invested in the market, due to which there is a possibility of getting good returns. For this reason, you can achieve your monthly income target even by investing less amount.
After all, what is the right strategy?
It is clear that retirement planning is not just a game of savings but also of choosing the right investment option. While FDs and annuities are safer, options like SWP can give better returns with smaller corpus although they also involve market risk.
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