A Question Every Retiree Asks
“Srikanth ji, I’ve retired now. I have about ₹1.5 crore.
Where should I keep it? FD, pension plan, or buy a house for rent?”
This was Sharma ji’s question when he visited me after his
retirement.
Honestly, this is the same doubt almost every retiree has. And it’s a very
valid question, because retirement is not 2–3 years, it’s a journey of 25–30
years.
Let me share with you what I explained to Sharma ji — and it
may help you too.
The Popular Retirement Options
Bank Fixed Deposits
Yes, it feels safe. You put money, and every month/quarter, you get interest. And
the money too is easily accessible. But the problem is twofold:
- The
interest is fully taxable.
- The
interest doesn’t grow.
So, what looks like a comfortable ₹50,000 today may feel like just ₹25,000 in 10 years, thanks to inflation.
Hence, FDs are good for
short-term needs and emergencies, but they cannot protect you from rising costs
in a long retirement.
Rental Income from Property
Property is a favourite of many as it’s a physical, tangible asset. Many people
think — “Buy a flat, rent it out, and sit back.”
Rental Income may give steady flow of income and the underlying property can
also keep appreciating.
Sounds good, but reality is different: tenants may leave
suddenly, tenants may delay paying rent on time, maintenance costs and repairs
eat into your net returns.
And if you suddenly need money, you cannot sell just one room! Property is not
liquid.
And what many rarely think of… periods without tenant cause uncertainty in regular
flow of income.
Insurance Annuity / Pension
Plans
Here, you give your lump sum to the insurance company, and they promise to pay
you a fixed pension for life, guaranteed for life.
Peace of mind, yes. While your household expenses increase with inflation, the
annuity remains the same. In addition, you cannot take money out once invested.
Liquidity is zero.
Insurance Annuity / Pension Plans are useful as a “base income” — to cover
essentials — but it cannot be your only solution..
The Problem with All Three
All these options give you income, but not growth.
And retirement is a marathon, not a sprint. Without growth, even crores can
get eaten by inflation over 20–30 years.
That’s why I told Sharma ji — you need something better,
something that gives you both income and growth. Hence I suggested Sharmaji to
consider an SWP in Mutual Funds.
Enter SWP: The Akshay Patra for Retirees
SWP stands for Systematic Withdrawal Plan.
Here’s how it works:
- You
invest your retirement corpus in a mutual fund (a balanced mix of debt +
equity).
- You
instruct the fund to transfer a fixed amount to your bank account every
month.
- The
remaining residual will continue to grow.
Unlike FD or annuity, SWP allows flexibility. You can
increase your withdrawals every year to match inflation.
₹60,000 today… ₹63,000 next year… ₹66,000 the year after.
So, it’s just like a pension — but with flexibility and growth.
Sharma ji’s Example
Lets see Sharmaji’s example for better understanding.
Sharma ji had ₹1.5 crore.
He needed ₹60,000 per month.
If he kept the money in FD, he would get interest but no
growth.
If he bought an annuity, his income would never rise.
If he bought property, he would be stuck with headaches.
With SWP, he could:
- Start
withdrawing ₹60,000 every month.
- Increase
it to ₹63,000 next year, ₹66,000 the year after, and so on.
- By
the time he is 80, he may be withdrawing ₹1.5 lakh per month — while his
original corpus still remains strong.
This is what makes SWP like the Akshay Patra of the
Mahabharata — a bowl that never empties.
Why SWP is Different
- Flexibility:
You can increase, decrease, or stop withdrawals anytime.
- Growth:
Your money continues to work for you, unlike FD or annuity.
- Liquidity:
Need extra money suddenly? Withdraw more. Try doing that with an annuity!
- Tax
Advantage: In many cases, SWP can be more tax-efficient than FD
interest.
Should You Abandon FD, Annuity, or
Rental?
Not at all. I advised Sharma ji — Don’t put everything into
SWP. Balance is key.
- Keep
some money in FD for emergencies.
- Use
annuity for a basic safety net for essentials like food and utilities.
- Treat
Rental Income as additional source of flow.
Use the SWP as the retirement engine that drives
growth and income together to power your retirement lifestyle
SWP is like Coconut Tree
FDs and annuities are like cutting a tree for wood. Once you
cut, it’s gone.
SWP is like a coconut tree. You pluck coconuts (monthly income), but the tree
(your corpus) keeps growing.
REMEMBER :
Retirement isn’t about just surviving.
Retirement is about living with dignity, independence, and joy.
Traditional pensions give stability.
But for freedom, flexibility, and a rising income, SWP is your Akshay
Patra.
You worked hard all your life for money.
Now let money work for you — endlessly, silently, and faithfully.
All the very best,
Regards,
Srikanth
Matrubai
NISM Certified Retirement Advisor
Author & AMFI Registered Mutual Fund Distributor
⚠️ Disclaimer: Mutual fund
investments are subject to market risks. Please read all scheme-related
documents carefully before investing. Returns shown are illustrative and not
guaranteed. Consult a SEBI-registered financial advisor before investing.
The chart given here is for illustration purposes and not guaranteed.
Please contact your Advisor before taking a decision.
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