Retirement Planning
NPS or mutual funds: where should retirement money actually sit?
One has a lower cost and a tax deduction. The other has no lock-in and no annuity requirement. For most…
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Retirement Planning
Working out the corpus you need, using EPF, PPF and NPS well, and drawing it down without running out.
Sizing the corpus
Start with today's annual expenses, remove what stops at retirement, inflate to your retirement year, and divide by a safe withdrawal rate. The output is uncomfortable for most people, which is the point of doing it early enough to act on.
The building blocks #
EPF for salaried employees, with the option to raise contributions voluntarily. PPF with its long lock-in and tax-free maturity. NPS with an additional deduction and low costs, but an annuity requirement at exit. Equity mutual funds for the long horizon. Bank deposits for the years immediately ahead, not for the whole corpus.
Drawing it down #
Keep two to three years of spending in short-duration debt so a market fall never forces a sale at the bottom, refill it from equity in good years, and revisit the withdrawal rate every year rather than fixing it once at retirement.
What you will need
- EPF passbook and UAN details
- PPF and NPS statements
- Current annual household expenses
- Expected retirement age and any pension entitlement
- Existing investments earmarked for retirement
- Health cover that will continue after employment ends
Latest on Retirement Planning
Retirement Planning
Retirement Planning
How big a retirement corpus do you actually need?
Inflation, not returns, is what decides the number.
Latest articles
Retirement Planning
NPS or mutual funds: where should retirement money actually sit?
One has a lower cost and a tax deduction. The other has no lock-in and no annuity requirement. For most…
Retirement Planning
How big a retirement corpus do you actually need?
Inflation, not returns, is what decides the number.