Rs 2.5 crore retirement corpus: Can you get Rs 2 lakh monthly income for 25 years?

If you have a Rs 2.5 crore corpus and want to plan your retirement for the next 25 years, the first question that may come to your mind is what the right withdrawal rate is, or the amount that can help sustain the corpus for 25 years. When planning retirement with a corpus of Rs 2.5 crore, there can be many withdrawal strategies- you may choose a fixed withdrawal rate such as 4%, 5% or higher.

You may also start with a monthly withdrawal amount that increases every year by the percentage you choose. But which of them can help you get a monthly income for 25 years from your Rs 2.5 crore corpus, and what can be the sustainable monthly withdrawal amount?

Withdrawal from Rs 2.5 crore corpus at fixed rate


Many experts suggest investing the retirement corpus in low-risk instruments, such as liquid funds and debt funds, Senior Citizen Savings Scheme (SCSS), fixed deposits (FDs), and post office Monthly Income Scheme (MIS), from where you can withdraw a monthly income at a sustainable withdrawal rate.

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They recommend choosing a withdrawal rate that is lower than the annualised return of your retirement corpus. For example, if your rate of return from the retirement corpus is 6%, choosing a withdrawal rate in the range of 3%-5% may ensure that your corpus lasts long. If you choose a higher withdrawal rate, your corpus may erode before your retirement ends.

So, can you withdraw Rs 2 lakh per month so that your corpus lasts for 25 years?

Let’s see that at a 6% annualised return and at 4%-8% annual withdrawal rates will your Rs 2.5 crore retirement corpus last 25 years?

Annual return	withdrawal rate	Annual withdrawal	Monthly withdrawal	year corpus will end
6%	4%	₹ 10,00,000	₹ 83,333	Lifetime
6%	5%	₹ 12,50,000	₹ 1,04,167	Lifetime
6%	6%	₹ 15,00,000	₹ 1,25,000	49 years
6%	7%	₹ 17,50,000	₹ 1,45,833	28 years
6%	8%	₹ 20,00,000	₹ 1,66,667	21 years
6%	9.60%	₹ 24,00,000	₹ 2,00,000	15 years

In the table, you can see that at a 4%-5% withdrawal rate and 6% annualised return, your corpus can easily last a lifetime. At a 6% withdrawal rate, which Rs 1.25 lakh per month, it can last 49 years. At a 7% withdrawal rate, which is Rs 1.45 lakh per month, it can cover monthly expenses for 28 years, but if you increase the withdrawal rate to 8%, which is Rs 1.67 lakh per month, your corpus will last only 21 years. But if you increase the withdrawal rate to 9.60%, which is Rs 2 lakh a month, your corpus will last just 15 years.

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So, a Rs 2 lakh per month withdrawal is unlikely to last for 25 years if the corpus is invested in a safe instrument earning a 6% return. Therefore, the withdrawal rate should be at a comfortable level where you can easily withdraw a lifelong income.

But with time, inflation increases, and with that, your monthly expenses may also rise. In such a situation, it is necessary to choose a withdrawal amount that you can also increase every year.

For example, if you choose to withdraw Rs 1,00,000 per month from your Rs 2.5 crore and increase the withdrawal rate by 5% every year, your monthly expenses in the next two years will be Rs 1.05 lakh and Rs 1.11 lakh, respectively. But if you opt for it, will your Rs 2.50 crore corpus last 25 years?

Withdrawal from Rs 2.5 crore corpus at increasing yearly income

Assuming that you will get a 6% annualised return on a Rs 2.5 crore corpus, we will calculate how long your corpus may last if you choose to pick Rs 80,000-Rs 1,20,000 per month in the first year of withdrawal and increase it by 5% every year.

Year 1 monthly withdrawal	Increase in withdrawal rate/year	Return from corpus	How long corpus will last
₹ 80,000	5%	6%	29 years
₹ 90,000	5%	6%	26 years
₹ 1,00,000	5%	6%	24 years
₹ 1,10,000	5%	6%	21 years
₹ 1,20,000	5%	6%	18 years
₹ 2,00,000	5%	6%	11 years

In the calculations, you can see that if you choose to withdraw Rs 2 lakh/month in the first year of your retirement and increase the yearly withdrawal amount by 5% every year, at a 6% annualised return, the corpus will last approximately 11 years.

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Even if you choose to withdraw Rs 1 lakh/month in the first year and increase the withdrawal amount by 5% each year, the corpus may last approximately 24 years. Lowering the withdrawal amount to Rs 90,000 or Rs 80,000/month and increasing it by 5% annually may help your corpus sustain for more than 25 years.

In all our calculations, we are assuming that the amount required in a year will be withdrawn at the beginning of the year and will be distributed monthly.

So, if you choose the second withdrawal option, where you can increase your withdrawal amount every year, starting with the right amount is necessary to achieve your retirement goal of 25 years.

But if you want to start your retirement with a higher amount, such as Rs 1 lakh or more with a 5% annual increase in withdrawals, you should start with a higher retirement corpus, or your corpus will erode before you achieve your retirement goal.

Other options to make your corpus last long is to invest a part of your portfolio into equities for a long term to ensure that your portfolio earns a higher return and is able to support a higher withdrawal for a longer period. A bucket strategy can help in this case.