Retirement Corpus – A Simple and Practical Guide for a Secure Second Innings of Life
1. The new chapter begins: The day a person steps into retirement brings both a smile and a sigh — a smile for freedom from deadlines and office pressures, and a sigh for the new responsibility of managing a lifetime’s savings wisely.
After decades of hard work and discipline, the long-awaited corpus finally rests in one’s account — not as a surprise, but as a well-earned reward. Yet, this comfort raises a crucial question: How do I make this money last through my second innings?
Every retiree enters this stage with a different mindset. Even two individuals retiring on the same day with the same corpus may have entirely different circumstances and priorities.
And for many, terms like mutual funds, hybrid schemes or the stock market appear complicated or risky.
So, this article focuses on simple, safe, and easy-to-understand ways to utilise the retirement corpus wisely.
2. Example: Mr Sharma’s Story: Mr Sharma, aged 60, begins his second innings with a corpus of Rs . 80 lakhs received from Provident Fund and Gratuity. He lives with his wife in their own home and earns Rs . 25,000 per month from a rental property. His children are well settled. His goals are simple — steady income, safety, and peace of mind.
3. The Retirement Checklist: Before deploying his funds, Mr Sharma prepares a simple checklist to evaluate his expenses, liquidity needs and comfort level. This helps him balance safety, liquidity, and the stability of his income. His checklist includes:
(a) Emergency Fund
(b) Health Insurance & Medical Reserve
(c) Assessment of Monthly Income Needs
(d) Allocation of Retirement Corpus for Regular Income
(e) Managing Inflation
(f) Maintaining Liquidity & Safety
(g) Tax Planning
(h) Periodic Review and Renewal
(i) Record Keeping and Family Awareness
Each of these checklist points is crucial for ensuring financial comfort during retirement — let’s explore them one by one.
3.1 Emergency Fund: Mr Sharma should maintain Rs . 5 lakhs (approximately 12 months of expenses) in a savings account with a sweep-in FD facility. This ensures quick access during medical or household emergencies without affecting long-term investments.
3.2 Health Insurance & Medical Reserve: Health is the foundation of financial peace. Mr Sharma must maintain health insurance through either an employer-backed group policy or a senior citizen policy (Annual premium approx. Rs. 40,000–Rs. 50,000). Additionally, a medical reserve of Rs. 3 lakhs in a joint account provides a buffer against unexpected hospital expenses.
3.3 Assessment of Monthly Income Needs: Mr Sharma’s monthly expenses are Rs. 70,000. He receives Rs. 25,000 from rent, so he needs Rs. 45,000 per month from his retirement corpus. While planning income for the next 20 years, he also considers 6% annual inflation.
3.4 Allocation of Corpus for Regular Income: After setting aside Rs 8 lakhs (emergency + health fund), Rs. 72 lakhs remain for investment. A simple allocation of safe, government-backed options may look like this:-
| Instrument | Allocation (%) | Amount (Rs.) | Rate | Monthly Income (Rs.) | Remarks |
| Senior Citizen Savings Scheme (SCSS) | 25% | 18,00,000 | 8.2% | 12,300 | Govt-backed; quarterly interest |
| Post Office MIS | 15% | 10,80,000 | 7.4% | 6,660 | Monthly payout |
| PMVVY (LIC) | 20% | 14,40,000 | 7.4% | 8,880 | Pension-like assured return |
| Senior Citizen FDs | 20% | 14,40,000 | 7.0% | 8,400 | Split across reputed banks |
| RBI Floating Rate Bonds | 10% | 7,20,000 | 8.0% | 4,800 | Sovereign-backed; 7-year lock-in |
| Post Office TD (5-year) | 10% | 7,20,000 | 7.5% | 4,500 | Safe & predictable |
| Total Monthly Income approx. Rs. 45,540 | |||||
| Note: The interest rates mentioned above are indicative and subject to change from time to time in accordance with Government and Institutional policies. | |||||
The scenario is purely illustrative. In real life, each person’s financial background, risk tolerance, and level of investment knowledge vary. Therefore, the use of the retirement fund should always be tailored to individual circumstances.
Retirees with additional income sources, such as equity portfolios, EPS or NPS benefits, or other sources, can adjust these allocations accordingly.
3.5. Managing Inflation: An inflation of 5–6% can gradually decrease purchasing power. Mr Sharma should reinvest maturing deposits at the prevailing higher rates, build a small inflation buffer by reinvesting part of his annual interest income, and rely on periodic increases in rental income to reduce the inflation impact.
3.6. Maintain Liquidity and Safety: Capital safety and liquidity should be the top priority. Mr Sharma may use a ladder strategy — spreading deposits across 1-, 3-, and 5-year terms to ensure regular liquidity and reinvestment flexibility. All investments should be with government-backed or reputable financial institutions.
3.7. Tax Planning: Most fixed-income instruments are fully taxable as “Income from Other Sources.’ Since Mr Sharma’s estimated annual income remains below Rs. 12 lakhs, he can claim a full tax rebate under Section 87A. Submitting Form 15H helps prevent unnecessary TDS deductions.
3.8 Review and Renewal. Even safe investments require monitoring. An annual review helps ensure timely renewal of maturing deposits, reinvestment at better rates, and no funds remain idle.
3.9 Records, Nominations, and Family Awareness: Financial peace comes from clarity. Mr Sharma should maintain updated nominations, a simple list of investments with maturity dates, and a single location for all documents. Family members must be aware of this location.
4. Conclusion: For Mr Sharma and thousands of retirees like him, retirement is not about chasing high returns; it’s about living confidently. A well-managed corpus ensures regular income, medical support, emergency preparedness & dignity and independence.
Retirement planning is not about how much one earns from the money — it’s about how confidently one lives with it.
Disclaimer: The article is for educational purposes only.
The author can be approached at caanitabhadra@gmail.com
Author Bio
Some portion of the retirement fund should always be invested in equity/hybrid mutual funds. No investment can beat equity return in the long run. Moreover tax rates are more efficient in equity investments.