How to plan your retirement with mutual funds

Purchasing a car or a new home, taking a trip around the world, planning your child's wedding are all financial goals. So is retirement. But the difference between retirement and the rest of goals is that retirement is not an option. You may not purchase a fancy car, or you might inherit a home, you might even not want a trip around the world, and your child could opt for a small, inexpensive wedding - all of these goals have alternate scenarios. But retirement is an eventuality that you will have to face as your life progresses. There is no avoiding retirement. So how do you plan for achieving this financial goal?

Getting Started with Retirement Mutual Fund

If retirement planning is on your mind, there are different mutual funds specifically designed to cater to retirement plans. These can help you ensure that you live a financially independent life once you stop working. Here's everything you need to know to plan your retirement with mutual funds.

For starters, a retirement plan should ensure that even after retirement, you should be able to maintain the same lifestyle that you currently have. With no monthly income, you will have to rely on your retirement corpus to manage your post-retirement expenses. One of the most important things that you will need to know to plan your retirement effectively is how much money you will need to retire comfortably. A goal-based approach is one of the best ways to invest in mutual funds, especially those mutual funds designed to cater to the goal of retirement.

What is Retirement Mutual Fund

A retirement mutual fund is an open-ended retirement scheme that helps you save for retirement. These funds invest in a mix of equity and debt financial instruments to ensure growth while treading with caution. There is also a lock-in period, usually up to five years or until retirement, whichever is earlier. The main objective behind a retirement mutual fund is to have a regular income post-retirement. This mutual fund can help you grow your retirement corpus while keeping in mind the growing inflation.

In a mutual fund retirement plan, you can opt for a systematic withdrawal system (you don't even have to buy an annuity unlike in a pension fund. An orderly withdrawal system provides you with liquidity to meet your immediate cash flow requirements post-retirement.

What are the benefits of planning your retirement with mutual funds?

Planning your retirement with mutual funds allows you the benefit of flexibility and transparency. It also gives you the advantage of saving on tax! Let's deep dive into the benefits of mutual funds for retirement.


Mutual funds allow you flexibility which means you can withdraw your investment partially or wholly. Having said that some mutual funds that are purely retirement-specific would have a lock-in period, sometimes up to 5 years. Additionally, you don't have to have a lot of money to start on mutual funds - you can start with a small amount with a Systematic Investment Plan (SIP). Let's say you start investing Rs 5,000 per month for 20 years at age 30. If your mutual fund grows at 10% annually, you can have a retirement corpus of a little over Rs. 1 crore by the time you are 50 years old.

Tax Efficient

One of the most important goals for every taxpayer during tax season is saving on income tax. Often, this goal becomes crucial and, in a bid, to save tax and file our returns in time, we tend to make mistakes which can cost us in the future. A mutual fund which mainly relates to saving tax can help you save a lot of money on your retirement corpus. In the case of equity mutual funds, long-term capital gains are tax-free up to Rs. 1 lakh. You can also avail of tax benefits up to Rs. 1.5 lakh under Section 80C of the Income Tax Act.

Asset allocation

When you opt for a retirement mutual fund, you can choose how to allocate hour assets - don't worry, your mutual fund relationship management will guide you if you are a mutual fund novice. They will help you choose how to allocate your assets based on your retirement goal viz. your return target and your risk appetite viz. your ability to take risks. This gives you full control over your retirement mutual fund.

Post-retirement life requires you to have a stable source of income to be able to continue your lifestyle. With the help of retirement mutual funds India, you can easily plan for a secure and comfortable future.

Open ZERO Brokerage Demat Account