How you can earn more in the early years of your retirement

Ashish is 67 and lives in his own house with his wife. Over the years he saved for retirement by putting away money in fixed deposits and small savings schemes. That saving now augments his pension. However, seven years into his retirement Ashish is unsure if his savings will last his and his wife’s lifetime. The spiralling cost of living is not what he had bargained for. He does not want his children’s support. So how can he ensure that he does not outlive his savings?

Ashish is lucky he has recognised the problem early. One way to deal with the problem is to consider his post-retirement years in two phases—the first 10 to 12 years and the remaining. The first phase is when Ashish can take a few measures to augment his income and grow his corpus. In the second stage, when age is not on his side, he can deploy the corpus to earn a steady income.

The corpus can be augmented in two ways. First, Ashish can seek alternate employment and generate additional income to allow his corpus to grow in value. He should also recast his portfolio which is currently in low return investments to include high return and high risk investments. A small exposure to equity through mutual fund schemes such as monthly income plans, balanced funds or even large-cap funds will be suitable given his circumstances and will help the corpus go farther.


Ashish will then have a larger portion of his retirement corpus for the second phase of his retirement when he is unlikely to generate additional income. At this stage, it will be a good idea to use the corpus to buy an immediate annuity covering him and his wife for life. Inflation adjusted annuities are also available where the payouts are linked to inflation indices. Annuity may be a better option for Ashish rather than trying to manage his investments on his own to generate an income for life.


The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.