How can a Retiree deploy Rs 50 Lakh Retirement Corpus for Regular Income?|| Quoted (Economic Times)

I was recently quoted in Economic Times WEALTH (7-13 July 2025) in the Q&A section, where a panel of experts answers readers’ questions related to various aspects of their personal finances.

And I also had an expanded view on the same (which isn’t published in the newspaper but might be of help to many who would want to understand about it). Sharing the same below:

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Q – My father is retiring in September 2025 with a retirement corpus of ₹50 lakh. We are looking to invest this amount to generate a steady monthly income for his routine expenses. While our target is an annual return of 15–20%, we are risk-averse and prefer low to moderate-risk options. Could you suggest a suitable investment strategy that balances our return expectations with capital protection and regular income?

A – There is a clear disconnect between the return expectation (targeting 15-20% pa) and your father’s risk personality (risk-averse, preferring low-to-moderate risk). Achieving 15-20% returns with low risk is not feasible. High returns you are targeting typically come with high-risk strategies, which have potential for capital losses as well. Hence, those are not suitable for retirement planning.

Given your father’s approaching retirement, and that he is generally risk-averse (with low-to-moderate risk appetite), it is suggested to instead target a balanced strategy that protects capital, generates steady income, and also takes controlled risks to optimally increase returns.

Assuming there is no other income source (pension, rental, etc.), here is what can be done to address the blended requirement of safety, regular income, some liquidity and growth:

• Put Rs 25 lakh in Senior Citizen Savings Scheme (SCSS). At the current 8.2% pa, it will generate Rs 2.05 lakh in annual interest income (paid in parts quarterly).
• Put Rs 10 lakh in RBI Floating Rate Bonds (RBI FRB) at 8.05%. This will generate about Rs 81,000 annually (paid in parts half yearly).
• Put Rs 5 lakh in Bank FDs at ~ 7.25%. This will generate about Rs 36-37,000 annually. This can also act as a source of immediate liquidity and emergency fund of sorts when a large amount is needed unexpectedly. Alternatives might be higher-return options like corporate FDs (8-10%), but these carry credit risk, and hence are not suited for your father’s risk-averse profile.
• Put about Rs 3-5 lakh in Conservative Hybrid (or debt funds). This can be used for starting SWP if and when additional regular income is needed in a tax-efficient manner.
• Put the remaining Rs 5-7 lakh in Flexicap / Aggressive Hybrid funds. This part is not for immediate consumption but to beat inflation over time. Also, be willing to wait for at least 5-7 years to allow this equity part to deliver decent returns. When investing in this, stagger the deployment over 6 months to average out.

So, while income generation is handled via a combination of SCSS, RBI FRB, FD interest, SWP from debt-oriented funds, etc., the need for inflation-beating growth will be provided via equity funds. Make sure to have your father’s portfolio reviewed by an investment advisor every 1-2 years to ensure the strategy’s relevance over time.

Details of your father’s standalone health insurance are not known. If he doesn’t have one, please ensure he gets coverage of at least Rs 15 lakh. Also, if you (the son) are working, then you can have him added to your corporate health insurance plan as well.

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