Dhirendra Kumar advises on being conservative with your withdrawals during retirement
06-Nov-2019
Click here to watch the video
I want to invest a total of Rs 50 lakh towards my retirement and will require a total of Rs 40,000 per month during retirement. Kindly suggest.
- Suman
This is a very aggressive expectation because you want to redeem almost about Rs 4.8 lakh per year after investing Rs 50 lakh. But the story doesn't end here, you may need Rs 40,000 today but to keep up to the rising cost you may require Rs 45,000 after two years.
A withdrawal rate of 10 per cent is too much specially in the initial years.
If you invest in an aggressive hybrid fund with a withdrawal rate of 5-6 per cent, then you maybe able to attain a situation that your income and accumulation will keep on rising with inflation. So if after withdrawing six per cent, your corpus grows by 12 per cent then your accumulation will grow by 6 per cent which will be able to support your rising income.
Stick to a withdrawal rate of 6 per cent and do not go beyond that specially in the early years. This will help in reducing the risk of outliving your savings.
So you will have to increase your corpus of Rs 50 lakh to a point where your need of Rs 5 lakh an year doesn't exceed 6 per cent of your corpus specifically in the initial years.
Back
