What is the retirement corpus required to draw Rs. one lakh a month as income?

Published: September 17, 2022 at 6:00 am

A reader asks, “I am 50 years old and plan to retire next year. My yearly expense is Rs. 12 lakhs. What is the corpus required to sustain 35 years in retirement?”

The Rs. 12 lakhs annual expense (or Rs. one lakh a month) is only for the first year of retirement. For each subsequent year, it would be prudent to assume that expenses increase at the rate of % (inflation assumption).

Let us find out the corpus required using the freefincal robo advisory tool. For immediate retirement, for a given existing corpus, the tool would tell us whether a bucket strategy can be used or if the corpus is too low, an annuity purchase is recommended. A custom bucket strategy calculation is also possible.


  • Years in retirement: 40 (from age 50 to age 90). To err on the side of caution, we will use age 90 instead of age 85 assumed by the reader.
  • Inflation after retirement: 6%

Results: Method 1 (using bucket strategy alone)

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
  • Input: To find out the minimum corpus required for an initial income of Rs. one lakh per month, we shall set the existing corpus to zero.
  • Output: Rs. 2.1 Crores is required to provide guaranteed inflation-protected income from fixed income sources (at 5% return) for the first 15 years of retirement. Out of this, an emergency corpus of Rs. 18.1 Lakhs is set aside. Here we have not opted for income flooring. That is, not part of the income is from a pension.
  • An additional Rs. 1.7 Crores is to be invested in three buckets. The total equity allocation out of this is Rs. 1.7 Crores is about 60-63%. and the rest in fixed income. A detailed illustration of this strategy is available here” Retirement plan review: Am I on track to retire by 50?
  • Thus the total minimum corpus required is Rs. 3.8 crores. Note that out of this, only 28% is in equity.

Results: Method 2 (using bucket strategy and a single annuity)

  • If Rs. 12 lakhs per year is required as a guaranteed pension (income floor) and the inflationary increase is managed from a fixed income bucket, then Rs. 3.11 Crores is necessary for the first 15Y alone! See: Creating the “ideal” retirement plan with income flooring!
  • An additional Rs. 1.26 Crores is to be invested in three buckets. The total equity allocation out of this Rs. 1.26 Crores is about 65%, and the rest is in fixed income.
  • Thus the total minimum corpus required is about Rs. 4.37 crores. Note that out of this, only 19% is in equity. This is because, Rs. 2.4 Crores is required for the annuity, assuming the post-tax annuity rate is 5%.

Results: Method 3 (using bucket strategy and multiple annuities)

Here, the retiree buys an annuity at different stages in retirement (say every ten years). This is explained in detail here: Use this annuity ladder calculator to plan for retirement with multiple pension streams.

  • The total corpus required in this case is (hold on to your chairs!) Rs. 8.67 Crores.

The reader must take stock of the available corpus and decide on the strategy. If the existing corpus is well below that recommended in method 1 (using bucket strategy alone), then it is better to (1) postpone retirement, (2) consider annuities as the major income component (inflation protection is then not possible), (3) get the professional opinion of a SEBI registered fee-only advisor.

Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.
🔥Now Watch Let's Get Rich With Pattu தமிழில் (in Tamil)! 🔥
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter using the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl-version covers of "Chinchu Gets a superpower".
Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)