Should retirees still hold equity?

Last reviewed October 2026

The short answer

For most retirees, yes: some equity still belongs in the portfolio, usually the part of your money you won’t need for the next seven years or more. Retirement can last 25 to 30 years, and over that time rising prices are a bigger danger to most families than a bad year in the stock market.

How much equity depends on four things: how large your corpus is compared with what you spend, whether you have a pension or rent coming in, your health and family longevity, and how calmly you can watch your money fall for a while. There is no single right percentage, and anyone who gives you one without asking these questions is guessing.

Why “all safe” isn’t as safe as it looks

Take a couple in Coimbatore who retire at 60 with ₹1.5 crore and need ₹60,000 a month today. That’s ₹7.2 lakh a year, under 5% of the corpus, which feels comfortable.

If household costs rise by around 6% a year, that ₹60,000 becomes roughly ₹1.2 lakh a month by the time they are 72, and about ₹2.4 lakh by 84. Medical costs often rise faster than that. A portfolio held entirely in deposits and debt may earn only a little more than inflation after tax, so the corpus can quietly shrink in real terms just when the bills are growing.

Equity is the part of the portfolio that has historically grown faster than inflation over long periods. It is volatile year to year, but money you won’t touch for a decade has time to ride out the falls. Our study of 100-month Sensex SIPs, The Hundred, shows how much time in the market has mattered in the past, though past patterns are no guarantee of the future.

The real risk is selling at the wrong time

A fall in equity only hurts a retiree permanently if they are forced to sell during it to pay for groceries or a hospital bill. So the answer isn’t to avoid equity altogether. It is to make sure you never have to sell equity when markets are down.

The simplest way we know is to divide the corpus by when you’ll need the money:

Every year or so, you top up the near-term bucket from whichever of the other two has done well. In a good year for markets, you take gains from equity. In a bad year, you draw from debt and leave equity alone to recover. In this example, equity ends up at around half the corpus, but for many retirees it is well below that.

A word on tax

Equity fund units held for more than 12 months are taxed at 12.5% on long-term gains above ₹1.25 lakh a year; units sold within 12 months are taxed at 20%. Gains on debt funds bought after 1 April 2023 are taxed at your income slab rate, however long you hold them. For a retiree in a low tax bracket, both can be quite efficient. A systematic withdrawal plan from equity also tends to be taxed lightly in the early years, because each withdrawal is mostly your own capital coming back.

What we’d usually suggest

• Work out your annual withdrawal first. List what you spend, then subtract pension, rent or annuity income. The gap is what the corpus must provide.
• Keep two to three years of that gap in very safe places. This is what lets you sleep through a market fall.
• Put only long-term money in equity, and prefer diversified, less aggressive categories over small-cap or thematic funds.
• Rebalance once a year, not every time the news is loud.
• Review your equity share every few years. It often makes sense to reduce it gradually in your late seventies and eighties, as the horizon shortens.

We should be open about one thing: as distributors, we earn more on equity funds than on debt or liquid funds. That is exactly why we start from your withdrawal needs, not from a target equity number. If your needs say 25% equity, that is what we will suggest. You can read more about how we earn.

When it’s different

• A large pension covers your expenses. If a government or company pension pays all your bills, your corpus is really for your children or emergencies, and you can afford more equity, or less, purely by preference.
• A small corpus. If your savings will last only 8 to 10 years, keeping the money stable and predictable usually matters more than growth. Equity may play a small role or none.
• Poor health or a known large expense. If you expect major medical costs or a family commitment in the next few years, that money should not be in equity.
• Your temperament. If a 20% fall would make you sell everything in a panic, a smaller equity share you can stick with is better than a larger one you abandon.

CurateMyMoney is an AMFI-registered mutual fund distributor (ARN-184811). Mutual fund investments are subject to market risks. Read all scheme-related documents carefully. Tax rules mentioned are as applicable at the time of writing and may change; please check the current rules or consult a tax professional before acting.