Life begins at 60! After a long career, you are finally looking pleasurably at retirement, at beginning a new phase. But as you adapt to retired life, the one key task you face is generating a regular income from your savings, especially as there would be no more salary inflows.
As interest rates harden in light of the high inflation currently prevalent, it is all the more important to invest your corpus in such a way that your kitty doesn’t get eroded. Here’s how you could go about this vital task.

Before getting into the avenues for investing and also deciding the asset allocation itself, it is important to set a few assumptions in place.
- You have ₹1 crore as retirement benefits.
- There is no pension income that you receive.
- We assume that you already have your own medical insurance policy with sufficient coverage — not the one given by your last employer — that also covers your spouse
- You have already repaid all your loans and have no liabilities
- There are no major pending financial obligations such as on child’s college education or marriage. Even if any of these is pending, we assume you have made provisions for those separately.

This is not a commentary on whether ₹1 crore is enough for your retirement but an asset allocation exercise to optimise your portfolio returns without taking too much risk.

First, you must allocate ₹10 lakh as an emergency fund. This can be held in any liquid or money market fund (Aditya Birla Sun Life Money Manager and SBI Savings). You could also choose to keep the amount in your savings account in a bank that offers higher interest for maintaining large balances. Our choice would be IDFC First Bank. The key factors of investing in these are safety and liquidity, and not return maximisation.

Given that this is an emergency fund, it must be used only in the case of exigencies. It must be replenished if there is any withdrawal.

Next, some part of the portfolio must go towards equities even after retirement. We suggest 20 per cent at least. So, set aside ₹20 lakh for equity investments.

You can choose large-cap index funds and aggressive hybrid mutual funds for the purpose. Our choices would be the UTI Nifty 50 Index Fund and ICICI Prudential Equity & Debt Fund. The large-cap and aggressive hybrid, as categories, have delivered over 13 per cent returns over the past 10 years.

Even if we assume 10-odd per cent returns over the long term, your investment would double every seven years. You can take out profits over the long term and just retain your original investment amount in these funds. These profits can be redeployed in suitable fixed-income options.

You can stagger this ₹20 lakh investment over a period of 1-2 years. That leaves ₹70 lakh for generating your regular income. Here are six avenues (including g-secs) to deploy the amount.

In deciding the avenues, we have taken the safety aspect into consideration. The threshold for returns has been set at 7 per cent — only those investments offering higher have been considered.

The SCSS is a great vehicle for the retired. It is an extremely safe investment option. The SCSS is like a fixed deposit with assured returns. Theinterest rate on offer is 7.6 per cent a year. Interest payments are done every quarter.Theinterest rate is reviewed every quarterby the government.

You can open an account in your neighbourhood post-office.ICICI Bank, State Bank of India and Bank of Barodaamong a few others also offer the SCSS account.

The maximum amount you can invest in an SCSS account is ₹15 lakh. We suggest that you utilise the full limit and invest ₹15 lakh in it. At 7.6 per cent,you would receive ₹28,500 interest each quarter. These payments are generally made on the first of January, April, July and October each year.

The SCSS account runs for five years. You can extend it for another three years upon maturity, which can be done only once.

Investments up to ₹1.5 lakh qualify for deduction under section 80C of the Income Tax Act.

The interest earned is added to your income and taxed at the applicable slab.

Premature closure is allowed with penalties.

It is a policy introduced by the government and run by LIC for providing pensions to those aged 60 and above. The scheme, which was launched in 2020, has been extended till March 31, 2023. Theinterest rate on offer is 7.4 per cent a year.

The scheme mostly works like a deposit with periodic payouts.You can invest up to ₹15 lakh ( ₹1,448,086 plus taxes) in it.

We suggest you invest the entire ₹15 lakh in it. For this amount, you will get an annual pension of ₹111,000 or ₹76.6 for every ₹1,000 purchase price ( ₹1,448,086).

Monthly, quarterly and half-yearly payouts are also available. The investment is for 10 years. At the end of 10 years, you get back the purchase price. If there is any unfortunate occurrence before 10 years, the purchase price is given to the nominee.

The interest paid by the scheme is fully taxed at your applicable slab. You can close the account prematurely only for exceptional reasons, such as treating any illness for yourself or your spouse. The surrender value is set at 98 per cent of the purchase price.

Bajaj Finance and HDFC offer senior citizens the best rate at7.85 per cent (44 months) and 7.75 per cent (45 months), respectively. These are for the yearly payout options of the deposits. Both deposits carry the highest AAA credit rating. So, timely payment of interest and principal is assured. You also can take monthly, quarterly, or half-yearly interest payouts on these deposits, but the rates are a tad lower.

You can allocate ₹5 lakh each to the deposits of Bajaj Finance and HDFC.

You will get an annual interest payment of ₹78,000 by investing in these two deposits.

As with other options, the interest is taxed at your applicable tax slab.

The RBI floating rate savings bonds 2020 are taxable instruments.

The interest rate on these bonds is pegged to the interest offered by the NSC (National Savings Certificate). An additional 35 basis points interest is given on these bonds.

Currently, NSC offers 6.8 interest per annum. So, theRBI bonds give 7.15 per cent. Interest is paid out twice a year — in January and July. These bonds run for a tenure of seven years. Premature withdrawals are allowed only for senior citizens. The interest paid is taxable at your slab.

You can apply for these bonds at banks such as SBI, Bank of Baroda, HDFC Bank, ICICI Bank and Axis Bank, among a few others. You may have to visit a bank branch to buy these bonds. These bonds are also available on the RBI Retail Direct platform. You can invest ₹10 lakh in these bonds for a total income of ₹71,500 in two instalments.

This is offered by insurance companies. You pay a single premium (purchase price) and the insurance company pays you a pension for life. The purchase price is returned to the nominee upon any unfortunate event. The yields (XIRR) offered by most insurers are not very attractive.

Going by quotes available at Policybazaar, HDFC Life Insurance’s Immediate annuity alone crosses the 7 per cent threshold. It offers 7.07 per cent yield if the annuity were to run for 15 years and close to 7.1 per cent if the timeframe is 20 years.

Yearly payouts are considered. Given that you can lock into the rate for life, you can invest ₹10 lakh in it.