Retirement in India often brings the dream of a comfortable, worry-free life. This can involve travelling occasionally, spending time with family and simply maintaining a decent lifestyle without financial stress.
For many Indians, retirement planning boils down to one simple question: Will my savings generate a stable monthly income without running out? If your target is Rs 1 lakh a month, the good news is that it is achievable with a Rs 1 crore retirement corpus: provided you plan sensibly and manage risk carefully.
For retirement savings to endure, investment returns must comfortably outpace inflation, ensuring that purchasing power is preserved over time. Equally important is how much is withdrawn each year.
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Financial planners often cite the widely followed 4% rule, which suggests that retirees can draw 4% of their corpus annually, adjusted for inflation, without exhausting their savings, provided long-term returns remain above 6%.
Consider a retiree with a corpus of Rs 1 crore who limits annual withdrawals to 4%, or roughly Rs 4 lakh a year. If investment returns exceed that level, the savings would stretch well beyond 25 years. However, once withdrawals are adjusted each year upwards to keep pace with 4% inflation, the same corpus would last about 25 years if returns merely match inflation.
Higher investment returns can give retirees more room to increase withdrawals. When a retirement portfolio delivers returns well above the commonly cited 4% level, a higher income draw may still be viable.
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Case 1: Retirement corpus earns 6% returns, inflation is 4%
Assuming a 6% annual return and 4% inflation, withdrawal choices make a dramatic difference to how long a Rs 1 crore corpus survives. At a withdrawal rate of Rs 1 lakh per month, the corpus will last for roughly a decade.
Case 2: Retirement corpus earns 8% returns, inflation is 4%
Stronger investment returns can dramatically extend the life of a retirement fund. Even a modest improvement in annual returns, by around 2%, can allow retirees to draw a steady, inflation-adjusted income of Rs 50,000 a month for well over 25 years.
However, as withdrawals rise further, longevity drops sharply. A first-year income of Rs 75,000 a month limits the corpus to about 14 years, while Rs 1 lakh a month shortens it to under 10 years.
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Case 3: Retirement corpus earns 10% returns, inflation is 4%
With overall returns higher by another 2%, retirees could draw an inflation-adjusted income of Rs 50,000 a month for more than four decades.
Even with a higher starting income of Rs 50,000 a month, equivalent to Rs 6 lakh annually, the corpus remains resilient, supporting withdrawals for nearly 43 years and retaining close to Rs 1.7 crore after two decades.
The picture deteriorates as withdrawals rise. A monthly payout of Rs 75,000 limits sustainability to around 17 years, while Rs 1 lakh a month reduces it to just under 11 years.
To conclude, a Rs 1 crore corpus is a solid achievement, but relying on it alone for Rs 1 lakh monthly indefinitely is probably unrealistic in India. It can comfortably support Rs 40,000–60,000 monthly for decades with prudent management.
Withdrawing 12% annually is aggressive. Unless your investments consistently grow at 15–18% (which is highly volatile and risky for a retiree), you risk exhausting your capital within 8–10 years.
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