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Where do I park my money for regular Income during retirement?

You can supplement your regular income by deploying the balance amount in monthly income plans of mutual funds


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This old article may have references to outdated tax rules and laws. For up-to-date information on taxation of mutual funds, refer to https://www.valueresearchonline.com/tax/

I am a 59 year old corporate employee and will retire in Jan 2017. Will get around R60 Lakh as superannuation plus family pension of around R. 12000 per month. Have investment of around R18 Lakhs in shares and R13 Lakhs in mutual funds (market value). Will have R5 Lakhs health insurance (on hospitalization) from employers post retirement. Additionally I have BOB Health Plan for R.5 lakh for both of us. Will have no loans outstanding. I will live in my own apartment. How to invest my superannuation fund to generate monthly income of around R50000 per month post income tax and over and above the pension income?
- Kishor

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To begin with, from your superannuation fund, you should park a portion in a savings account with a sweep in facility in such a way that you are able to meet your monthly expenses from it for the first year.

For regular income, you may invest in government backed schemes like Senior Citizens Savings Scheme (SCSS), Post Office Monthly Income Scheme (POMIS) to secure a regular income and protect your capital. Under SCSS, you can invest a maximum of R30 Lakhs on joint name of you and your wife. The scheme offers a return of 8.6 percent per annum. The quarterly pay out will be R64500 (will work out to R21,500 per month) . Further you can invest upto R9 Lakh (joint account) in POMIS which offers a return of 7.8 percent per annum. This will generate a monthly income of R5850. Please note, all debt instruments are taxable. The income from SCSS and POMIS will be added to your income and taxed as per your slab rate.

To supplement these, balanced funds will be a good choice as they offer good returns and are taxed at zero rates after 1 year. You can invest in a Systematic Investment Plan (SIP) format in the balanced funds over a period of time, and after a year you can opt for systematic withdrawal plan based on your requirement. This way you will benefit from the high returns generated on your regular investment and also cater to your monthly income needs.

Take a look at the best balanced funds.

This old article may have references to outdated tax rules and laws. For up-to-date information on taxation of mutual funds, refer to https://www.valueresearchonline.com/tax/

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