The short answer
A sensible starting point is to withdraw about 4% to 5% of your corpus in the first year, and increase that amount a little each year to keep up with inflation. On a ₹1 crore corpus, that’s roughly ₹35,000 to ₹40,000 a month to begin with.
Withdraw much more than that, and there’s a real chance the money runs out while you still need it. The table below shows how quickly.
How long ₹1 crore lasts
Here’s how long a ₹1 crore corpus lasts at different monthly withdrawals, assuming it earns 8% a year and you increase your withdrawal by 6% every year to keep pace with rising costs.
| Monthly withdrawal (first year) | Share of corpus per year | Money lasts about |
|---|---|---|
| ₹35,000 | 4.2% | 33 years |
| ₹40,000 | 4.8% | 27 years |
| ₹50,000 | 6.0% | 21 years |
| ₹60,000 | 7.2% | 17 years |
| ₹70,000 | 8.4% | 14 years |
| ₹80,000 | 9.6% | 12 years |
For illustration only. Assumes a steady 8% annual return and withdrawals rising 6% each year. Real returns go up and down, which can shorten or lengthen these periods.
Someone who retires at 60 should plan for at least 25 to 30 years. Look at the table again with that in mind: ₹50,000 a month feels reasonable on ₹1 crore, but it runs out in about 21 years — around age 81.
Why the money runs out faster than you’d expect
Your expenses keep rising. ₹50,000 a month today becomes about ₹90,000 a month in ten years at 6% inflation. Your withdrawals have to rise with it, or your standard of living falls.
Returns don’t arrive evenly. An average of 8% a year might mean 15% one year and a loss the next. A bad year early in retirement hurts more than a bad year later, because you’re selling investments while prices are low, and that money never gets the chance to recover.
It’s the combination that does the damage. Rising withdrawals from a corpus that isn’t growing steadily is what drains it. That’s why a starting withdrawal of 4% to 5% leaves room for both.
What we’d usually suggest
Draw an income through an SWP rather than living on interest. A Systematic Withdrawal Plan pays you a fixed amount each month by selling a small number of your mutual fund units. You choose the amount, and you can raise it every year.
It’s usually more tax-efficient than a fixed deposit. With an FD, all the interest is taxable every year. With an SWP, each withdrawal is partly your own money coming back to you, and only the gain portion is taxed. For example, in the first year:
- ₹1 crore in an FD at 7% earns ₹7 lakh of interest, and all ₹7 lakh is taxable.
- ₹1 crore in a debt fund earning 7%, with ₹50,000 withdrawn every month, pays you ₹6 lakh, but only about ₹21,000 of it counts as taxable gain.
This advantage is largest in the early years and narrows over time, as each withdrawal contains more gain. Gains from debt funds bought after April 2023 are taxed at your income-tax slab rate; gains from equity funds held for over a year are taxed at 12.5% above ₹1.25 lakh a year.
Keep some of your corpus in equity. A portfolio with no equity at all will struggle to keep up with 25 years of rising prices. A common approach is to keep the next few years of withdrawals in debt funds and let the rest grow in equity, moving money across from equity after good years. We explain how this works on our retirement planning page.
Review it every year. Check how much is left, how the markets have done and what you actually spent, then adjust. An SWP is not something to set up once and forget.
When it’s different
- You have other income. A pension, rent or a spouse’s income means your corpus doesn’t have to carry everything, so you can withdraw more.
- You retire later. If you retire at 65 rather than 58, your money needs to last fewer years, so a slightly higher withdrawal can work.
- You retire early. At 50 or 55, you may need 35 years or more of income. Start lower, closer to 3.5% to 4%.
- You want to leave money to your children. Withdraw less, so a meaningful amount remains.
- You have health concerns. Keep a separate reserve for medical costs, and don’t count it as part of your income corpus.
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.
