Your Financial Plan

My husband will retire from a PSU bank shortly. We are in good health and have adequate health insurance for medical emergencies. Our children are financially independent. With his retirement corpus we need a safe and regular income to beat inflation. Do suggest a solution with tax efficient return.


You can get safe and regular income but it might not beat inflation. Your monthly expenses of ₹40,000 appear slightly high. If you wish to maintain the same standard of living and if inflation grows at 7 per cent, your monthly expenses after 10 years will be ₹78,000.The shortfall will keep rising and it will go as high as ₹72,000 after 20 years, considering pension DA increases at 5 per cent. So, while protecting the major corpus, you need to look for investments outside fixed deposits to beat inflation.

Among fixed income options available, only the Senior Citizen Savings Scheme offers 9.3 per cent but the maximum investment here is restricted to ₹15 lakh. The interest payout happens once in a quarter. Invest the rest in the Post Office Monthly Income Scheme, which offers 8.4 per cent returns. Again, maximum investment here is capped at ₹9 lakh.

Interest rates are expected to be benign over the next few years. So, if inflation falls, you will have positive real returns on bank deposits. Split your retirement into baskets of 10 years. The funds required to meet the expenses after 10 years can be exposed to equity market through mutual funds.

Invest 20-25 per cent of the retirement corpus in ICICI Pru Balanced Advantage Fund and Edelweiss Absolute Return Fund. ICICI Pru offers monthly dividend whereas Edelweiss gives quarterly dividend.

Both the funds invest in equities, but they have shown resilience during market corrections and were able to participate well in market rallies. Invest the rest of your funds in bank deposits. To meet the shortfall later in life, opt for reverse mortgage against your property.


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