Retirement Planning: How to Create a Regular Income Stream Post Retirement
Published by Outlook Money
Abhishek Kumar's role: Quoted
Abhishek Kumar explained a bucket approach that keeps money for later years in a mix of equity and debt, which can help avoid panic selling. He cautioned that the 4 per cent rule may not fit Indian conditions and said a lower withdrawal rate can make a corpus last longer.
What Abhishek Kumar said
How can a bucket approach help a retiree avoid selling during a market fall?
I suggest splitting the corpus by when the money will be needed. Money meant for expenses more than about seven years away can sit in a blend of equity and debt, so it has time to grow and to refill the nearer buckets. Because spending for the next few years is already kept in liquid holdings, a retiree is not pushed into selling investments when markets drop, and near-term cash needs stay covered.
Does the 4 per cent withdrawal rule work for retirees in India?
In my view, the rule came out of Western economies and does not fully fit India, where inflation runs higher and annuity yields are lower. I would treat it only as a rough guide and review withdrawals every year. Keeping the withdrawal rate closer to 3 per cent can help a retirement corpus last longer.
What should a retiree weigh when building a post-retirement income plan?
I see a dependable retirement income as more than smart investing. It means striking a balance between liquidity, safety, returns and flexibility. There is no single mix that suits everyone: the right combination depends on each person's lifestyle, health, dependents and appetite for risk, so the plan has to be built around the individual.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on retirement
The article sets out ways to build a regular income after retirement, starting with an adequate corpus. It covers a bucket strategy, annuities for essential expenses, using the 4 per cent withdrawal rule with care, government schemes such as SCSS, systematic withdrawals from debt funds, and setting money aside for health care and emergencies.
Publisher source
Retirement Planning: How to Create a Regular Income Stream Post Retirement