If you are thinking about retirement, then we will tell you a way through which you will get a monthly income of Rs 87,000 after retirement.

New Delhi: Retirement is an important time for everyone. This is the time when one needs regular income for their daily expenses but does not have a source to earn income. In such a situation, the returns from their investments can come in handy. They can make monthly, or lump sum investments in their working years and let this fund grow for their retirement years.

Learn how investments grow over the long term, how the power of compounding plays a vital role in building a large retirement corpus, and how a lump sum investment and SWP of Rs 5,00,000 can yield a monthly income of Rs 87,000 for 30 years.

Lumpsum investment of Rs 5,00,000 to Rs 87,000 monthly income for 30 years

Today we will learn how a lump sum investment of Rs 5,00,000 can grow in 30 years and how one can withdraw Rs 87,000 per month for 30 years.

Retirement fund in 30 years from a lump sum investment of Rs 5,00,000

Here we are taking the example of a 25-year-old investor who makes a lump sum investment of Rs 5,00,000. The investor gets 12 per cent annual return on his investment and lets the fund grow for 30 years. The estimated capital gain in 30 years will be Rs 1,44,79,961, while the estimated retirement fund will be Rs 1,49,79,961.

The investor will have this fund at the age of 55 years.

Income Tax on Retirement Corpus

As per the current long-term capital gains (LTCG) tax rate of 12.5 per cent, the estimated tax on Rs 1,49,79,961 will be Rs 17,94,370.125 (including LTCG exemption of Rs 1,25,000).

The estimated remaining retirement corpus after paying tax will be Rs 1,31,85,590.875. This will be the estimated corpus for SWP investment.

How SWP investment works

In SWP investment, you invest a lump sum amount in a mutual fund and ask the fund house to pay you a fixed amount every month. For this, the fund house sells net asset value (NAV) units worth the same amount from your investment. But at the same time, your investment also grows.

So if your withdrawal rate is lower than the growth rate, your retirement fund will not be exhausted, and you can withdraw from it forever.

How to get a monthly income of Rs 87,000 for 30 years?

An investor who is currently 55 years old can invest his deposits in a conservative mutual fund where he gets an annual growth rate of 7 per cent. At this growth rate, a sum of Rs 1,31,85,590.875 can give a monthly income of Rs 87,000 for 30 years. This means that the investor can get Rs 87,000 every month till the age of 85.

The total withdrawal amount in 30 years will be Rs 3,13,20,000, while the remaining amount will be Rs 2,64,203.