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Ramalingam Kalirajan |8342 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Apr 28, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Apr 12, 2025

Sir, I'm 54 years old, having a wife and a son who is 21 years old and studying, I have set aside a sum of 60 lakhs for his future studies, marriage and also a contingency fund and emergency fund for ourselves, I also have a health insurance of 30 lakhs. I have a retirement fund of 2.3 crore and debt free living in a class B city from which we want to start an STP from 2026 January till survival, will 1 lakh per month withdrawal be a safe option so that the fund don't run out and also can grow

Ans: You are 54 years old, living a debt-free life.

You have a loving family with a wife and a 21-year-old son.

You have wisely set aside Rs 60 lakh for your son’s future needs.

You have also secured your family with a health insurance of Rs 30 lakh.

You have a retirement corpus of Rs 2.3 crore ready for post-retirement life.

You are planning to start STP from January 2026.

Your aim is to withdraw Rs 1 lakh per month from then till lifetime.

A Big Appreciation for Your Systematic Financial Planning

You have planned your son’s education, marriage, and emergency needs separately.

You have ensured health coverage without burdening your retirement savings.

You have no loan pressure, making your future cash flows smoother.

You have started thinking about withdrawal phase well in advance.

Very few people plan this carefully before retiring.

Key Points to Think Before Deciding the Monthly Withdrawal

Inflation will keep increasing your living expenses.

Your retirement fund must beat inflation and last till lifetime.

Your withdrawal must not deplete the fund too early.

Your corpus must continue growing even after withdrawals.

You should maintain enough liquidity for emergencies.

Investment must be done considering safety, growth and liquidity together.

Important Factors That Will Affect Your STP Plan

Your life expectancy plays a major role.

In India, life expectancy is increasing with better healthcare.

You must plan till at least 90 years of age.

Inflation usually averages around 5-6% per year.

Some costs like healthcare rise even faster than average inflation.

Post-retirement, medical expenses usually increase after 70 years of age.

Is Rs 1 Lakh Per Month Safe for Your Corpus of Rs 2.3 Crore?

At Rs 1 lakh per month, yearly withdrawal will be Rs 12 lakh.

That is around 5.2% of your corpus in the first year.

Withdrawal rate of 4% to 5% is considered relatively safer worldwide.

However, with 5% inflation, your monthly need will keep rising every year.

By 2036, Rs 1 lakh today will feel like Rs 1.6 lakh approximately.

Thus, you must plan for increasing withdrawal, not fixed.

How You Should Structure Your Retirement Corpus

Divide corpus into three buckets: Short-term, Medium-term and Long-term.

Short-Term Bucket

Keep 2 to 3 years of withdrawal need in ultra short-term debt funds.

This gives high liquidity and low volatility.

Medium-Term Bucket

Invest 5 to 7 years' withdrawal need in short-term debt or hybrid funds.

This balances moderate returns with lower risk.

Long-Term Bucket

Keep the remaining corpus in actively managed equity mutual funds.

Equity is needed to beat inflation over long period.

Long-term bucket gives growth and protects your purchasing power.

Smart Usage of STP for Withdrawals

Start a Systematic Transfer Plan (STP) from short-term funds to your savings account.

Monthly STP withdrawal of Rs 1 lakh can start from January 2026.

Every year, transfer some money from medium-term bucket to short-term bucket.

Every few years, move money from long-term bucket to medium-term bucket.

This step-wise movement ensures money is always available for withdrawals.

Why Bucket Strategy Is Better

Reduces the risk of withdrawing during market downfall.

Provides peace of mind with cash flow predictability.

Maintains growth potential without taking unnecessary risk.

Taxation Aspect You Must Keep in Mind

Under new mutual fund tax rules, equity mutual fund LTCG above Rs 1.25 lakh is taxed at 12.5%.

STCG in equity mutual funds is taxed at 20%.

For debt mutual funds, both LTCG and STCG are taxed as per your slab rate.

Proper harvesting of gains and rebalancing can optimise your taxation.

Additional Safety Nets You Should Plan

Review your health insurance coverage once every few years.

Medical inflation can be 8-10% which is much higher than general inflation.

You may buy a super top-up policy if healthcare costs rise sharply.

Always maintain a separate emergency fund apart from STP corpus.

Emergency fund should cover at least 1 year’s worth of living expenses.

Keep your Will and nominations updated to avoid legal complications.

This gives complete financial peace to your family too.

Some Additional Thoughtful Points for Stronger Retirement Planning

Avoid withdrawing lump sums suddenly unless very necessary.

If possible, keep withdrawals lower in first few years of retirement.

This allows your corpus to grow bigger for later years.

Do not invest in risky products like unregulated chit funds or bonds offering unrealistic returns.

Stay with well-known AMC-backed mutual funds and safe debt products.

Avoid investing heavily in direct equity shares at this stage.

Direct equity needs active tracking, which becomes difficult after 65+ years.

Rebalancing portfolio every 2-3 years helps maintain proper asset allocation.

Rebalancing is shifting from equity to debt or vice-versa based on market changes.

Tax planning should be done every year to reduce overall tax outgo.

Harvesting LTCG up to exemption limit every year can save taxes smartly.

What You Must Absolutely Avoid

Do not withdraw more than 5% initially unless absolutely needed.

Do not depend fully on fixed deposits or only debt mutual funds.

Inflation can silently erode value of your money if growth assets are missing.

Do not ignore regular review meetings with your Certified Financial Planner.

Your Corpus of Rs 2.3 Crore Has a Good Potential If Handled Properly

With right withdrawal rate, proper investment split and regular monitoring, corpus can last comfortably.

You can comfortably manage Rs 1 lakh monthly withdrawals initially.

Later slight adjustments might be needed based on inflation and healthcare needs.

Answering Your Original Question Clearly

Yes, Rs 1 lakh per month from Rs 2.3 crore corpus is broadly safe.

But it should be planned carefully using bucket strategy.

Corpus allocation, inflation adjustment, taxation, healthcare costs must be reviewed regularly.

Simple, disciplined approach will make your retirement stress-free and prosperous.

Finally

Your financial preparedness at this stage is excellent.

Little fine-tuning will ensure even better results.

Retirement should be about enjoyment, not about worrying about money.

Having a structured plan with built-in flexibility is the secret to peaceful retired life.

You have laid the foundation well, now it needs regular, gentle care.

With proper planning and mindful execution, your golden years will truly be golden.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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