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				<title>How should I invest Rs. 5 Crores for a peaceful retirement?</title>
				<link>https://freefincal.com/how-should-i-invest-rs-5-crores-for-a-peaceful-retirement/</link>
				<pubDate>Tue, 09 Dec 2025 00:30:30 +0000</pubDate>
								<dc:creator><![CDATA[M. Pattabiraman]]></dc:creator>				<guid isPermaLink="false">https://freefincal.com/?p=232179</guid>
					<description><![CDATA[Last Updated on December 9, 2025 at 8:30 am A reader says, &#8220;I am retiring...]]></description>

				<content:encoded><![CDATA[<figure><img src="https://freefincal.com/wp-content/uploads/2022/04/Retirement-planning-with-income-flooring-illustration.jpg" class="type:primaryImage" /></figure><p id="post-modified-info">Last Updated on December 9, 2025 at 8:30 am</p>
<p>A reader says, &#8220;I am retiring next month with a nest egg of Rs. 5 Crores. Please guide me on how to invest this for a peaceful retirement. I am 55 years old. My wife is 56. Our annual expenses are Rs. 11.8 lakhs (including Rs. 20 lakh health insurance cover)&#8221;.</p>
<p>We shall punch this scenario into the <a href="https://freefincal.com/robo-advisory-software/"><strong>freefincal robo advisor tool</strong></a> and discuss the results. We shall assume a rounded monthly expense of Rs. 1,00,000 (annual expenses of 12 L).</p>
<p><strong>Inputs and assumptions: </strong>(The user can modify all inputs and assumptions).</p>
<p><strong>Note:</strong> The recommendations given below are valid only for this specific circumstance. Not all assumptions, details of the final results and back-end calculations are shown here. Please use the robo-advisor tool to create and customise your plan.</p>
<ul>
<li>Current monthly expenses that will persist in retirement: Rs. 1,00,000</li>
<li>Age you wish to retire 55</li>
<li>Years to retirement 0</li>
<li>Total average monthly expenses (annual/12) 1,00,000</li>
<li>Post-tax return expected from equity investments % 10</li>
<li>Post-tax return expected from current taxable fixed income % 6</li>
<li>Rate of return expected from current tax-free fixed income % 7</li>
<li>Present Value of investments intended for retirement ONLY Rs. 5,00,00,000</li>
<li>Inflation before retirement (%) 7 (not relevant here)</li>
<li>Assumed life expectancy of younger spouse 90</li>
<li>Inflation during retirement (%) 6</li>
<li>Monthly expenses in the first year of retirement: Rs. 1,00,000</li>
<li>Years in retirement (until younger spouse reaches age 90) 35</li>
<li>Do you want to use the income flooring option? <strong>Yes</strong></li>
<li>Percentage of first years income to floor (guarantee with a pension for life) 100%</li>
</ul>
<p>The corpus appears large enough to afford income flooring. Here, we purchase an annuity (pension plan or an RBI bond) that offers annual interest equal to annual expenses in the first year of retirement. Since this annuity is taxable as per slab, it is important to lower the annuity tax to account for tax. We have used a sedate 4%. A schematic below illustrates the idea (the expenses in the vertical axis do not correspond to the current situation). Read more: <a href="https://freefincal.com/ideal-retirement-plan-income-flooring/">Creating the &#8220;ideal&#8221; retirement plan with income flooring!</a></p>

<ul>
<li>Income here refers to Inflation-protected income. That is a retirement income that will increase every year at the rate of the assumed inflation of 6%</li>
<li>Total Corpus in hand: Rs. 5,00,00,000</li>
<li>Create an emergency corpus for at least about 25,00,000. Put some of this in a liquid fund and some in a sweep SB account with a debit card.</li>
<li>Corpus required to create <strong>income flooring annuity</strong> Rs 3,00,00,000</li>
</ul>
<p>You can maintain the following asset allocation with the net corpus (total &#8211; emergency corpus) as long as you can and are sure you can generate an income. With advancing age, you can gradually reduce equity to zero if you no longer need higher returns. You can review this by using this tool each year in retirement.</p>
<ul>
<li>Suggested Equity allocation (in all buckets combined) after retirement: 33%</li>
<li>Suggest Fixed income allocation (in all buckets combined) after retirement 67%</li>
<li>The total retirement corpus can be divided into four buckets: (1) income, (2) low risk, (3) medium risk, and (4) high risk.</li>
</ul>
<table width="617">
<tbody>
<tr>
<td width="467"><span >Retirement Buckets</span></td>
<td width="150"><span >Amount to be invested in each bucket<br />
</span></td>
</tr>
<tr>
<td width="467"><span >Income bucket (100% liquid fixed income) to provide income in retirement with a return of 5 % p.a. This will ensure income for the first 15 years of retirement</span></td>
<td width="150"> 68 Lakhs</td>
</tr>
<tr>
<td width="467"><span >low-risk bucket with 60 % fixed income (rest equity) expected to grow at 8 % p.a.</span></td>
<td width="150"><span >61.5 Lakhs<br />
</span></td>
</tr>
<tr>
<td width="467"><span >A medium-risk bucket with 50 % fixed income (rest equity) is expected to grow at 9 % p.a.</span></td>
<td><span >26.6 Lakhs<br />
</span></td>
</tr>
<tr>
<td width="467"><span >A high-risk bucket with 0 % fixed income (rest equity) is expected to grow at 10 % p.a.</span></td>
<td><span >18.7 Lakhs<br />
</span></td>
</tr>
</tbody>
</table>
<p>Note: while calculating the amount to be invested in low/medium/high-risk buckets, it is assumed they will provide income sequentially. That is, the low-risk bucket will provide income after the &#8220;income bucket&#8221; is exhausted, and the medium bucket will provide income after the low-risk bucket is exhausted.</p>
<p>In practice, the buckets will have to be actively managed in retirement. For example, if the low/medium/high-risk buckets offer a higher return than expected after one year, you can shift some funds from any bucket to the income bucket. This way, you will ensure that income is guaranteed at any point in time for the next 10Y or 15Y.</p>
<p>On the other hand, if equity returns are negative in a year, you can consider shifting some funds from the low-risk or medium-risk bucket to the high-risk bucket to rebalance the portfolio (these are only examples; possibilities are endless). This is not an easy task, even for a professional. Therefore, proceed with caution. You can use the <a href="https://freefincal.com/the-retirement-bucket-strategy-simulator/">bucket strategy simulator</a> to understand how this works.</p>
<p>The post <a href="https://freefincal.com/how-should-i-invest-rs-5-crores-for-a-peaceful-retirement/">How should I invest Rs. 5 Crores for a peaceful retirement?</a> appeared first on <a href="https://freefincal.com">freefincal</a>.</p>
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