A wise investor is someone who starts thinking about retirement early in their career. There are savings options like EPF and NPS that can give you a regular income and help you build a large fund for the future. But apart from these, you can also create a regular income, almost equal to your salary, after retirement by using your monthly savings in the right way.

The SIP and SWP method can help you with this. First, you invest regularly through SIP. Later, after retirement, you can use SWP to get a fixed income every month. This is a smart way to plan for a tension-free retired life.

50: The New Retirement Age

It is always better to start planning and investing for retirement at the right time. If you start saving and investing wisely from a young age, you don’t have to wait till the age of 55 or 58 to retire. You can achieve financial freedom much earlier.

Today, many studies show that in the private sector, the age of 50 is becoming the new retirement age. Even young people in India are now planning to retire by the time they turn 50.

Build a Retirement Fund While You Are Working

Before you can start a Systematic Withdrawal Plan (SWP), you need to create a large fund. Let’s say you are 28 years old and want to retire at 50. That gives you 22 years to save and invest. A good way to do this is by starting a monthly SIP (Systematic Investment Plan).

Many mutual fund schemes have given returns of 15 to 18 percent over 20 to 22 years. But to be safe, we are taking an average return of 12 percent per year. The example here is based on a SIP of ₹5,000 every month.

SIP Plan for 22 Years

If you invest ₹5,000 every month for 22 years at a 12% annual return, you will have a fund of ₹1.04 crore (₹1,03,53,295) by the time you turn 50.

SWP Plan After Retirement

  1. After retirement at age 50, you can put your ₹1 crore into an SWP. This plan will give you a fixed monthly income.
  2. If the return on your SWP is 12% per year, and you withdraw ₹1 lakh per month, then over the next 22 years:
  3. You will receive ₹2.64 crore as monthly income
  4. After 22 years, around ₹40.19 lakh will still be left in your account
  5. Your total return will be ₹2.04 crore over your investment