Building wealth for retirement: How to plan Rs 1 lakh monthly passive income? Experts outline safe and risky routes – The Times of India

For most Indians, the fear of outliving retirement savings looms larger than ever as life expectancy rises and medical costs climb. Picture this: your morning coffee in retirement, bills paid, lifestyle intact — and all of it supported by a steady Rs 1 lakh monthly income. Financial planners say this is possible, but the secret lies in building the right retirement corpus and matching it with your risk appetite.Depending on the investment route you choose, the required savings range from Rs 1 crore to Rs 2 crore. Safe options like annuities and fixed deposits can work with Rs 2 crore, while those willing to take higher risks may target the same income with just Rs 1 crore in diversified equity funds.How much do you need to earn Rs 1 lakh a month?To generate Rs 12 lakh annually, the required corpus depends on the rate of return. With Rs 2 crore, investors can choose safer instruments like annuities, debt funds or fixed deposits, which typically offer around 6% returns, according to an ET report. For those with Rs 1.5 crore, instruments offering 8% returns, such as the Senior Citizens’ Savings Scheme, balanced hybrid funds or equity savings funds, may be enough. According to Value Research data (September 2, 2025) quoted in the ET analysis, balanced hybrid and equity savings funds have delivered 8.80% and 8.10% CAGR respectively over the last decade.Risk-tolerant investors with Rs 1.2 crore can aim for products that generate about 10% returns, such as aggressive hybrid, large-cap or large-and-midcap funds, which have delivered 11.98%, 12.75% and 14.69% CAGR respectively in the last 10 years. At the highest-risk level, those with Rs 1 crore can still target Rs 12 lakh annual income by investing in flexicap or multicap funds, which have historically returned over 12% CAGR. Flexicap funds, for instance, gave 13.64% CAGR in the past decade.

Table source: ETWithdrawal-based strategies to keep corpus intactSome planners recommend strategies that preserve capital while providing inflation-adjusted returns. Rohan Goyal of MIRA Money suggests a 4–5% withdrawal rate, requiring Rs 2.4–3 crore to sustainably generate Rs 12 lakh annually. “A 4–5% withdrawal rate is low enough that portfolio growth should outpace withdrawals, making the corpus last decades,” he was quoted as saying.Arun Kumar of FundsIndia advises an 85:15 split between aggressive hybrid and arbitrage funds, with systematic withdrawal plans (SWPs) starting after one year. Withdrawals should pause if the market corrects sharply and shift temporarily to arbitrage funds, resuming later.Elever’s Karan Aggarwal suggests a glide-path approach: begin with a 50:50 split between debt and arbitrage funds, then shift 10% annually towards equity until the sixth year, when equity allocation reaches 50%.Tax rules to rememberTax treatment varies across instruments. Equity funds attract 15–20% short-term capital gains tax and 10–12.5% long-term capital gains tax, while debt funds face 20% with indexation or 12.5% without. Hybrid funds are taxed according to their asset mix, said CA Suresh Surana.Don’t forget inflationA fixed withdrawal of Rs 1 lakh today may lose significant value over 10 years. SWPs that allow part of the corpus to remain invested and continue compounding can help balance current income with future security.Experts say there is no universal formula for securing Rs 1 lakh a month. “Start early, diversify across equity, debt and hybrid options, and review periodically,” one planner said. “What matters most is matching investments with risk appetite and keeping income inflation-adjusted.”(Disclaimer: The opinions, analyses and recommendations expressed herein are those of brokerage and do not reflect the views of The Times of India. Always consult with a qualified investment advisor or financial planner before making any investment decisions.)