Monthly cash flow beats big corpus in retirement planning

Retirement planning in India should focus on monthly cash flow rather than a large corpus target like Rs 3 crore, Rs 5 crore or Rs 10 crore, reports hindustantimes.com. The article argues that financial freedom depends on generating reliable income from investments to replace a salary. It suggests starting with the monthly expense requirement, for example, Rs 1.5 lakh, and then calculating the corpus needed using a withdrawal rate. At a 3.5% annual withdrawal rate, a Rs 18 lakh yearly need requires a corpus of about Rs 5.14 crore, at a 3% rate, the corpus rises to Rs 6 crore.

The report emphasizes that inflation will erode purchasing power over time, so the same lifestyle could cost more in future. A retirement portfolio should mix equities for growth and fixed-income assets like bonds for cash flow. For an investor needing Rs 1.5 lakh per month, a bond portfolio yielding 8% pre-tax annually would require Rs 2.25 crore, plus a liquidity buffer of Rs 9 lakh to cover six months of expenses. Staggering bond maturities via a bond ladder can align cash flows with future needs. Platforms such as Jiraaf are noted for helping investors compare bonds.