Find the monthly income a retirement fund can safely give you.
The exact inverse of the Retirement Corpus calculator — starting from a corpus instead of a target income.
Monthly income: (Corpus × withdrawal rate) ÷ 12
This calculator turns a retirement corpus into an income. You enter the size of your fund and a withdrawal rate, and it shows the yearly and monthly amount you can take out in the first year. It is the reverse of the corpus calculators: instead of asking how much you need, it asks what your existing savings can pay you.
It is most useful close to or at retirement. A retired central government employee with ₹3 crore from commutation, PF and investments wants to know whether that pays for his current lifestyle. A self-employed person in her fifties wants to see what her savings could support if she stopped working now. The question answered is: what monthly income can this corpus sustain?
1. Add up all the savings you will draw on in retirement to get the corpus C.
2. Pick a withdrawal rate w, for example 3.5% or 4%.
3. Yearly income in the first year = C × w ÷ 100.
4. Monthly income = yearly income ÷ 12.
5. Compare the monthly income with your expected monthly expenses.
6. For later years, increase the withdrawal in rupees by inflation, not by recalculating w on the new balance.
A safe withdrawal rate is the share of the starting corpus you can take out in year one, then raise with inflation every year, with a high chance that the money lasts for a planned number of years. The idea comes from studies of past market returns, mainly in the US, over thirty-year retirements. It is not a rule of physics. It depends on how the corpus is invested, on inflation and on how long retirement lasts, so it is best read as a planning guide.
Income equals corpus times rate, so doubling the corpus doubles the income. The rate matters just as much. Moving from 3.5% to 4% raises income by about 14%, but it also raises the chance of running out of money in a long retirement. Retirees who have a pension or rental income can often afford a slightly higher rate, since the corpus is not their only support. Those retiring early usually choose a lower rate because the money must last longer.
Two retirees with the same average return can have very different outcomes if one faces a market fall in the first few years. Withdrawals taken from a falling portfolio lock in losses, and the corpus has less to recover with. A simple defence is to keep one to three years of expenses in safe instruments, and to trim withdrawals slightly after a bad year. The calculator gives a first-year figure; managing sequence risk is what keeps that figure sustainable.
Mr Iyer has just retired with ₹3,00,00,000 across his PF, gratuity and mutual funds. He wants to see the monthly income it supports at a cautious 3.5% withdrawal rate.
Answer: Sustainable monthly income ₹87,500
Confusing the withdrawal rate with the return on the portfolio. They are different numbers.
Recomputing the withdrawal each year as a percentage of the current balance, which makes income swing with the market.
Including money set aside for a specific goal, such as a child's wedding, in the corpus.
Ignoring tax on withdrawals or interest, which reduces the spendable income.
Choosing a high rate for a retirement that may last 35 years or more.
Checking whether an existing corpus can support current living costs.
Deciding when it is safe to stop working or move to part-time work.
Comparing the income from a corpus with an annuity quote.
Planning a bucket strategy with a separate safe fund for the first years.
What withdrawal rate should I use?
4% is the commonly used starting point. Some retirees prefer to be safer and use 3-3.5% instead, for extra safety over a long retirement.