How to Create a Monthly Income Stream in Retirement

Retirement is a new beginning — and one of its biggest needs is a steady monthly income. The good news is that there are multiple ways to build a regular income stream in retirement in India, each catering to different needs and risk appetites.

In this article, let’s explore the various options, how to mix them smartly, and what a good monthly income portfolio can look like.

Here are some of the common avenues to generate regular income:

• Annuity or Pension Plans: Insurance companies offer pension plans where you pay a lump sum and receive guaranteed income for life.

• Rental Income: If you already own property, renting it out can provide stable monthly earnings.

• Systematic Withdrawal Plan (SWP) from Mutual Funds: You invest in mutual funds and withdraw a fixed amount regularly, allowing the balance to stay invested and grow.

• Senior Citizen Savings Scheme (SCSS) and Post Office Monthly Income Scheme (POMIS): Government-backed schemes offering fixed, regular returns.

• Bank Fixed Deposits (FDs): Banks offer monthly income FDs that pay out interest every month.

• Dividend Income: Some retirees invest in dividend-paying mutual funds or stocks, although dividends can fluctuate.

There is no single “best” method. The ideal approach is to diversify between guaranteed income sources and growth-oriented investments, based on your risk appetite and needs.

Here’s a practical framework:

• Cover Essentials with Guaranteed Income: Use annuities, SCSS, Post Office MIS, or bank FDs to cover necessary living expenses like food, healthcare, and utilities.

• Add Growth for Discretionary Expenses: Use SWPs from mutual funds to supplement lifestyle spending and beat inflation over time.

• Use Property Income Only if Already Owned: Rental income can be useful but buying property in retirement just for rent income is risky.

• Keep an Emergency Fund Ready: Always maintain 12–24 months’ worth of expenses in liquid investments like savings accounts or liquid mutual funds.

Here’s how a retiree can allocate their investments:

Conservative Retiree (Priority: Safety & Stability)

• 40% in annuity/pension plan

• 20% in SCSS

• 20% in POMIS or bank FDs

• 15% in SWP from debt funds

• 5% in emergency fund

Moderate Retiree (Priority: Balance of Stability + Growth)

• 30% in annuity

• 20% in SCSS/POMIS

• 30% in SWP from balanced mutual funds

• 10% from rental income/dividends

• 10% in emergency fund

Growth-Oriented Retiree (Priority: Higher Growth + Regular Income)

• 50% in SWP from balanced or hybrid mutual funds

• 20% in rental income/dividend income

• 20% in SCSS/bank FDs

• 10% in emergency fund

• Guarantee your necessities with annuities, SCSS, or safe FDs.

• Grow your surplus through carefully managed mutual fund SWPs.

• Keep liquidity handy for emergencies or unexpected expenses.

• Review annually to adjust for inflation and changing needs.

• Plan taxes wisely to avoid unnecessary burdens.

A simple thumb rule:
Guarantee for “Needs” | Grow for “Wants” | Keep Liquidity for “Surprises”

Retirement income planning is not just about finding the highest return — it’s about creating a reliable, diversified, and sustainable income stream that gives you peace of mind throughout your golden years. Whether you prefer absolute safety or a balance of stability and growth, it’s important to match your strategy with your comfort level and goals.

If you would like personalized advice on building a secure, inflation-beating retirement income plan tailored to your needs, feel free to reach out.
Let’s work together to make your retirement truly stress-free and financially independent.