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How a balanced portfolio, not heavy reliance on fixed deposits, can help you achieve the desired retirement corpus.
Inflation may ruin your existing farewell plan. (Photo Credit: X)
At the age of 50, having gone through decades of professional and personal commitments, most people plan to hang up their boots and bid farewell to work early at 55. Now imagine you’re also an investor with Rs 80 lakh parked in fixed deposits (FDs) and your monthly expenses not exceeding the Rs 60,000 mark. You should be able to achieve your desired goal, right?
While that may seem like the ultimate hack, the answer to such a question is very much complicated today. According to experts, it is not feasible, even for individuals who have a significant portion of wealth associated with an FD account, to safely ring the retirement bells and rest easy for the remainder of their lives.
With inflation approaching 6 per cent and life expectancy stretching to 75 years and beyond, safety nets like a fixed deposit plan may no longer suffice to retire early.
Projecting Expenses And Inflation
If such an individual’s existing monthly expenses end at Rs 60,000, experts project that at the age of 55, this will balloon up to Rs 80,000 with inflation rates entering the picture and prices of essentials such as groceries, utilities and leisure jumping up significantly. “This is the revised baseline amount required every month at the start of retirement,” said Sachin Jain, Managing Partner, Scripbox, as quoted by Money Control.
The required corpus to sustain a minimal monthly expense of Rs 80,000 for 20 years (i.e. 55-75 years of age), at an assumed rate of 6.5 per cent FD return, will be Rs 1.83 crore and more. “A meagre 0.47 per cent return after inflation and taxes, meaning your money fights just to hold ground,” said Col Sanjeev Govila (retd), CEO of Hum Fauji Initiatives.
Govila suspects that a Rs 80 lakh corpus will cover only 44 to 46 per cent of your needs after ending your professional life and raises the risk of premature depletion and exhaustion by the age of 70. “A 7 per cent FD might fund initial years, but by decade’s end, inflation outruns interest, risking a shortfall mid-retirement,” insisted Jain.
Diversify To Grow
To manage these gaps and aid your retirement goals, it is critical to diversify your investment plans and target a balanced portfolio that gives you 9-11 per cent annual returns. Jain suggested allocating funds in equity mutual funds for growth and debt/bonds for stability. It’s a blend that the experts reckon would help you achieve your retirement corpus goals within the available timeframe.
“Debt and hybrid mutual funds can outperform FDs on a post-tax basis, especially if held for more than three years, due to lower long-term capital gains tax and slightly higher returns,” said Govila. While this approach comes with its own risks of market volatility, interest rate fluctuations and emotional reactions amid market corrections, it is better than depending entirely on an FD plan.
Click here to add News18 as your preferred news source on Google. December 09, 2025, 15:58 IST
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