One of the biggest challenges that retirees face is how to make their retirement savings last a lifetime. Even if one has saved diligently throughout one’s working life and accumulated a sizeable nest egg, it may not be able to generate enough to sustain monthly expenses over the long term. This is mainly due to three factors: longer life spans, early retirement and falling interest rates. Another important factor is the rate at which personal inflation grows is much higher than anticipated.  If you are one of those individuals who have been working all your life and accumulated your savings into various asset classes like LIC, Fixed Deposits, Provident fund and been conservative with your savings and give you fixed returns, then it is time to relook at your asset allocation.

How would you fund your retirement

Having saved all your working life for your retirement needs, is the corpus created by you enough to meet your family  needs which of course keeps increasing with passage of time as personal inflation which often ignored hits each one of us hard. The average upper middle-class urban retiree must have enough corpus to last 25-30 years in retirement as against 15-20 years required in earlier times. It is also becoming increasingly common for people to retire in their early fifties to pursue their passion, hobbies and live a retired life based on their own terms. Further, interest rates are falling and investment options are narrowing down. Most of these low interest options also come with a lock in clause too, adding on to the pain. Hence arises a need for a good retirement plan.

Let us consider a scenario of a person having Rs. 1 crore to invest, in this case the best way would be to divide the same into 3 buckets :-

1. Bucket 1 – Meet the Needs of First Three Years

2. Bucket 2 – Meet the Needs of Next Three Years

3. Bucket 3 – Meet the Needs of Balance period / for life

The bucket strategy helps segregate long term investments from the money meant for immediate use. However, the investor needs to be fully committed to follow this approach. If he panics when stock markets tumble and withdraws his equity funds, the whole purpose of the strategy will be defeated. Hence, investors need to be fully committed to this approach and stay the course irrespective of market scenario.

Let us look at a scenario of growth for a portfolio at a growth rate of 10% per annum and how many years will one be able to survive based on average current needs of a family which varies from Rs 1 lakh to 1.5 lakhs on a monthly basis.

Mr. Chintamani

Option 1 : Appreciation at 10%

Age Initial Capital Add Growth Ending Capital
60 50,00,000 5,00,000  55,00,000
61 55,00,000 10,00,000 6,50,000  71,50,000
62 71,50,000 10,00,000 8,15,000  89,65,000
63 89,65,000 10,00,000 9,96,500 1,09,61,500
64 1,09,61,500 10,00,000 11,96,150 1,31,57,650
65 1,31,57,650  10,00,000 14,15,765 1,55,73,415
 Total 50,00,000
Yearly Amount
Age Initial Capital Withdrawal Growth Ending Capital
66 1,55,73,415 18,00,000 13,77,342 1,51,50,757
67 1,51,50,757 18,00,000 13,35,076 1,46,85,832
68 1,46,85,832 18,00,000 12,88,583 1,41,74,415
69 1,41,74,415 18,00,000 12,37,442 1,36,11,857
70 1,36,11,857 18,00,000 11,81,186 1,29,93,043
71 1,29,93,043 18,00,000 11,19,304 1,23,12,347
72 1,23,12,347 18,00,000 10,51,235 1,15,63,582
73 1,15,63,582 18,00,000 9,76,358 1,07,39,940
74 1,07,39,940 18,00,000 8,93,994  98,33,934
75 98,33,934 18,00,000 8,03,393  88,37,327
76 88,37,327 18,00,000 7,03,733  77,41,060
77 77,41,060 18,00,000 5,94,106  65,35,166
78 65,35,166 18,00,000 4,73,517  52,08,682
79 52,08,682 18,00,000 3,40,868  37,49,550
80 37,49,550 18,00,000 1,94,955  21,44,506
81 21,44,506 18,00,000 34,451 3,78,956

As we can see from the above table that the corpus created will be only sufficient enough till the age of 81 years or a twenty year period for a family with almost no capital left for survival thereafter and of course no legacy. Therefore arises a need for an asset allocation plan which can at least generate double digit returns on a consistent basis with almost no risk on capital. Also, we should not forget that as age advances, the need for withdrawal for personal expenses will keep increasing due to inflation and may be increase in medical expenses.


A person would always want to live a financially independent life without depending on their children or anybody in the family to meet their financial needs. There are various expenses for a retired person which maybe unexpected in nature. A well thought out plan even when a person retires or is about to retire can help live a very comfortable life and meet the needs without any concern.  One must start preparing for financial retirement plan at an early age and not start looking at when he or she is nearing the age of 60, earlier the better.


(The author Rishabh Adukia is a Chartered Accountant and qualified professional advising on wealth management to individuals, millennial’s, emerging HNIs including others. His articles are published regularly in various financial newspapers and can be reached on )

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Qualification: CA in Practice
Company: Adukia & Associates
Location: MUMBAI, Maharashtra, IN
Member Since: 19 Aug 2019 | Total Posts: 10
The author Rishabh Adukia is a Chartered Accountant and qualified professional advising on wealth management to individuals, millennia’s, emerging HNIs including others and can be reached on View Full Profile

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September 2020