How to invest Rs 2.5 cr for steady monthly income

A retiree with a Rs 2.5 crore corpus is seeking advice on how to generate a steady monthly income to cover their expenses and ensure their funds last through retirement. Working part-time for the next five years on an estimated Rs 1 lakh monthly income, the retiree has no significant liabilities. Experts recommend using the monthly earnings from this part-time work for the initial five years of retirement to support living expenses.

The decision between a monthly income stream from bank fixed deposits and debt mutual funds or utilizing a systematic withdrawal plan (SWP) in equity or hybrid mutual funds depends on balancing guaranteed income, tax efficiency, and growth. A combination of both options is suggested to achieve the best balance of safety and protection against inflation.

Retirees are advised to follow a bucket strategy for their retirement corpus. The first bucket, covering the first two years of expenses post-retirement, should be invested in arbitrage funds for quick returns. The second bucket, intended for years three to five, can comprise equity savings and hybrid funds to ensure tax efficiency. The final bucket, for expenses beyond five years, should be invested in equity.

A Systematic Withdrawal Plan (SWP) can be employed to make tax-efficient withdrawals while ensuring the corpus endures until the end of the retiree's life.