Turn retirement savings into monthly income

You get a monthly income from your retirement savings by putting the money where it pays at set intervals, or where you can draw a set amount from it. A systematic withdrawal plan (SWP) from a mutual fund pays the amount you choose by selling some of your units. A cash reserve kept apart means a sudden expense need not force you to break either.

How do you turn retirement savings into a monthly income?

You decide where the lump sum sits so that it pays you regularly, and how much leaves it each year. Your retirement corpus is the total you have saved by the day you stop working. A lump sum is that money arriving in one piece, such as a PF balance or gratuity.

Four things decide what suits you: when each rupee is needed, what your pension already covers, how large a fall you can sit through, and your tax slab (the rate for your income band). The Koshex app runs a risk-profile questionnaire.

The money has to last. India's Sample Registration System life tables for 2019-23 puts average life expectancy at age 60 at 18.4 years. That is an average, so about half of those who reach 60 live longer. See our retirement planning guide and planning for retirement.

What is sequence-of-returns risk, and why do the first years matter?

Sequence-of-returns risk means the order of returns matters once you are withdrawing. A fall early in retirement, while the pot is largest and you are selling to live, does more lasting damage than the same fall late on.

Take ₹40,00,000 with ₹25,000 withdrawn monthly. These yearly returns are assumed, not a forecast.

Bad year first: a 15% fall in year 1, then a 9% gain a year for nine years. About ₹29,20,280 is left after ten years.
Bad year last: a 9% gain a year for nine years, then a 15% fall in year 10. About ₹38,47,680 is left.
Steady: about 6.32% every year, the same overall growth as both cases above. About ₹33,23,497 is left.

Every case withdraws ₹30 lakh over ten years. The two uneven cases have the same ten returns in a different order, yet the second ends ₹9,27,400 higher. Each 15% fall is applied monthly at 1.25%, the method of our SWP calculator, where you can try your own figures.

How much can you withdraw each year without running out?

No single rate fits everyone: the larger the share of the corpus taken each year, the sooner it can run out. The withdrawal rate is that share, shown as a percentage.

One rough rule of thumb is the 4% rule, from a 1994 US study of American data from 1926: a first-year withdrawal of 4%, then raised with inflation, should have lasted 30 years. It is a rule of thumb from US studies, not an Indian rule and not from SEBI, AMFI, PFRDA or the RBI; our retirement planning guide covers it fully.

See how long money lasts at different monthly amounts in the SWP guide.

What is the bucket approach to retirement income?

The bucket approach splits your money by when you will need it, near, middle and far, and keeps each part in something suited to that wait. It is a way of thinking about time, not sizes.

Near money is for spending soon, so it sits where it does not fall in value.
Middle money sits in options that pay interest for a fixed term.
Far money sits where it can grow and has years to recover from a fall.

Some retirees refill the near bucket over time. A goal date is a reason to move money; a market level is not. See asset allocation.

Which options pay a regular income after retirement?

Options that pay at set intervals include bank fixed deposits (FDs) that pay out interest, the Senior Citizens' Savings Scheme (SCSS), the post office Monthly Income Scheme (POMIS) and RBI Floating Rate Savings Bonds. An SWP draws from a mutual fund instead. TDS is tax deducted at source before money reaches you.

Option	Who can use it	Pays	Rate or return	Lock-in and early exit	Tax and TDS
Bank FD with payouts	Any depositor; banks may offer higher rates to resident senior citizens	SBI: monthly on FDs of 12 months or more, at a lower rate than quarterly	Fixed for the term. SBI's card gives seniors 0.50 point more under 5 years	Up to ₹1 crore can be broken early at a lower rate minus a penalty	Slab rate. TDS above ₹50,000 a year (₹1,00,000 if 60 or older)
Company or NBFC FD	Per its terms	Per its terms	Per its terms	NBFC deposits run 12 to 60 months, locked for three months except on death or, for part, a medical emergency	Slab rate. TDS above ₹10,000 a year
SCSS	Residents aged 60 or more; some retirees from 55	Quarterly	8.2% for accounts opened 1 October to 31 December 2026	Five years, extendable. Closing in year 1 recovers all interest paid; year 2 costs 1.5% of the deposit; later 1%	Slab rate. TDS above the limit, says India Post
POMIS	Single or joint account	Monthly	7.4% for accounts opened 1 October to 31 December 2026	Five years, no extension. No withdrawal in year 1; closing after year 1 and before year 3 costs 2% of the deposit, then 1%	Slab rate. No section 123 (the old Section 80C) deduction
RBI Floating Rate Savings Bonds	Residents	Half-yearly	8.05% for 1 July to 31 December 2026, reset every six months	Seven years. Early encashment only at 60 or more, with a penalty	Slab rate. TDS above ₹10,000 a year
SWP from a mutual fund	Investors in a scheme that offers an SWP	The amount you choose, at a frequency the scheme offers (scheme documents offer monthly, quarterly, half-yearly and annual)	Not fixed; the value moves	Exit load may apply	Only the gain part of each withdrawal is taxed. No TDS for residents

SCSS takes up to ₹30 lakh across all accounts. POMIS takes at most ₹9 lakh in single accounts and ₹15 lakh in joint ones, counting all accounts. Company deposits have no cover from DICGC, the RBI's deposit insurer, which covers bank deposits up to ₹5,00,000 per depositor per bank. If ₹10,00,000 went into SCSS in October to December 2026, the 8.2% rate would pay ₹20,500 a quarter. Rules: SCSS and bonds, post office schemes.

A non-cumulative FD pays its interest out as it goes; a cumulative FD pays it all at the end. See monthly interest on a fixed deposit, senior citizen FDs, corporate FDs and the fixed deposit calculator.

For an SWP, each instalment sells units at that day's NAV (the price of one unit), so the unit balance falls. Monthly income from mutual funds has the detail.

Debt funds lend to governments, banks or companies by buying bonds. See the debt funds and liquid funds category pages (a liquid fund holds only debt and money market securities that mature within 91 days), the conservative hybrid funds page, and mutual funds in retirement planning. Customers can set up an SWP on Koshex, and Koshex also offers bank and corporate fixed deposits from a minimum of ₹10,000. See fixed deposits.

What can you do with your PF, gratuity, leave encashment and NPS money?

These arrive as lump sums around retirement; check first how much of each is taxed.

EPF. Your full EPF balance can be withdrawn on retirement after 55, on permanent and total incapacity, or before migrating abroad. The balance is left out of your total income after five years' continuous service with your employer. See our PF withdrawal guide and the EPF calculator.

Gratuity. Under the Code on Social Security, 2020, in force since 21 November 2025, an employee is generally entitled to gratuity after five years of continuous service, and a fixed-term employee after one year. Income tax decides how much is taxable. See the gratuity calculator.

Leave encashment. Leave encashed when you retire is tax-free in full for government employees. For others, the tax-free part is capped at the lowest of a few limits, the overall ceiling being ₹25 lakh across employers from 1 April 2023.

NPS. At normal exit, at age 60 or 15 years of subscription, whichever comes first, at least 20% of the corpus must buy an annuity (a pension paid by an insurer). A non-government subscriber can take up to 80% as a lump sum or by systematic withdrawal; government subscribers keep 60% as a lump sum and 40% for an annuity. The lump sum is exempt only up to 60% of the total amount payable; the rest is taxed at slab rates, as is annuity pension. See the NPS rules and annuities and pension plans.

If you retire between 55 and 60, you can open SCSS only within three months of receiving retirement benefits such as PF dues, gratuity, commuted pension or leave encashment, and only up to the amount of those benefits.

How is retirement income taxed?

Interest from deposits and government schemes is added to your income and taxed at your slab rate, an SWP is taxed only on the gain in each withdrawal, and pension counts as salary.

TDS on deposits: a bank deducts 10% once the FD and recurring deposit interest it credits in a tax year passes ₹50,000, or ₹1,00,000 if you are 60 or older at any time that year.
Form 121: this nil-tax declaration lasts one tax year. Below 60, income must also be within the tax-free limit; at 60 or more, only the nil-tax test applies.
Section 153 (the old Section 80TTB): a senior can deduct up to ₹50,000 of interest on deposits in any account, including time deposits, with a bank, co-operative bank or post office. Old regime only; not for company deposits. SCSS interest can generally count.
SCSS deposits: earn a deduction under section 123, old regime only, added back if you close within five years.
Debt funds: gains on units bought on or after 1 April 2023 are taxed at slab rates, whatever the holding period.
Equity-oriented funds (at least 65% in Indian listed shares): short-term gains (units held 12 months or less) are taxed at 20%, and long-term gains at 12.5% above ₹1,25,000 a year.
Pension: an employer pension gets a ₹75,000 standard deduction under the default regime.

More: senior citizen tax saving, FD tax, fund redemption tax.

How much cash should a retiree keep for emergencies?

Enough that a hospital bill or a family need can be paid without breaking a deposit early or selling fund units after a fall. The amount depends on your health, family and how quickly other money can be reached.

The exit costs in the table show why. closing SCSS in year 1 recovers all interest paid, POMIS costs 2% of the deposit if closed before three years, and an SWP sells units at that day's NAV.

The National Sample Survey's 80th round puts the average out-of-pocket cost of a hospital stay in 2025, excluding childbirth, at about ₹34,064. See planning for healthcare in retirement and where to keep emergency savings. Mutual fund redemption money is due within 3 working days.

FAQs

How can I get a monthly income from my retirement savings?

You get a monthly income by putting the money where it pays at set intervals or lets you draw a set amount. Bank deposits and government schemes pay interest on a schedule, while an SWP sells fund units for the amount you choose. Keeping a cash reserve apart means a sudden expense need not force you to break a deposit early.

Does the 4% rule work in India?

The 4% rule comes from a 1994 US study of American data from 1926. It found a first-year withdrawal of 4%, raised each year with inflation, should have lasted 30 years. It is a rough rule of thumb, not an Indian rule and not from SEBI, AMFI, PFRDA or the RBI.

Which pays every month: SCSS, POMIS or an FD?

POMIS pays monthly, at 7.4% for accounts opened 1 October to 31 December 2026, with a limit of ₹9 lakh across single accounts. SCSS pays quarterly. At SBI, a bank FD pays monthly on request for terms of 12 months or more, at a slightly lower rate than the quarterly payout.

Is an SWP or a fixed deposit better for retirement income?

They differ, so no verdict fits everyone. A fixed deposit pays a rate fixed for its term, and its interest is taxed at your slab rate. An SWP pays the amount you choose by selling units. Its value moves with the fund, and only the gain part of each withdrawal is taxed.

How should I invest my retirement corpus for monthly income?

No single split fits everyone, so look at the factors instead. These are when each rupee is needed, what your pension covers, how large a fall you can sit through and your tax slab. The bucket idea sorts money by when it is needed. The Koshex app runs a risk-profile questionnaire.

Is my retirement money taxed when I withdraw it?

It depends on the source. Deposit and scheme interest is taxed at your slab rate, and an SWP is taxed only on the gain in each withdrawal. NPS lump sums are exempt only up to 60% of the amount payable. EPF is left out of income after five years of continuous service, and pension counts as salary.

Can I set up a retirement income through Koshex?

Customers can set up an SWP on Koshex. Koshex also offers bank and corporate fixed deposits from a minimum of ₹10,000. Koshex is an app run by an AMFI-registered mutual fund distributor, and mutual funds on it are regular plans.