How to Plan Post Retirement Income using Mutual Funds?

Mark these words. Every month, almost every adult decides to save or invest at least a small portion of the monthly budget. All of it usually goes into the purchases of car, home, events like marriage, children and so on. How come we are neglecting the savings needed during retirement? Overlooking the concept of retirement savings is definitely not a good financial plan. When it comes to options known for retirement savings, the list is limited to PPF (Public provident fund), NPS (national pension system and fixed deposits. When it comes to a country like India, mutual funds are growing rapidly. Best mutual funds to invest for retirement are gaining ground for their soaring returns and well-planned payments.

Saving for retirement to afford monthly expenses was a thing from the past. Now, life post-retirement is all about travelling and experiencing all new things. That can be made possible only through mutual funds which help individuals to build a good-sized retirement corpus.

Why mutual funds for retirement savings?

  • A mutual fund is an investment vehicle which is formed by accumulating several investments and purchasing securities. The securities of any mutual fund are actively managed i.e., monitored by a professional.
  • Mutual funds go easy on small pockets too. Even a simple and small amount invested in the right mutual fund for a good period of time bears fruit.
  • The impact of inflation on retirement savings isn’t something which can be overlooked. That’s because saving for retirement is a long-term goal. The cost of living could flip and rise miraculously by the time one reaches retirement age. Growth mutual funds can help to balance out the difference in the long term.
  • There are certain mutual funds which don’t have a lock-in period. Unlike PPFs which have a lock-in period, mutual funds can be liquidated in times of emergency. Even if some funds have lock-in periods, they are usually short, say three to five years.

What is the best retirement plan?

  • Choosing the best retirement plan or the one that’s right for an individual is quite a daunting task. Here are some factors that one should keep in mind before selecting a plan.
  • Tenure: If one is starting out early, say 22-30 years of age, the type of mutual fund would be with moderate risk and steady growth. The risk factor increase as there is less time to build the corpus enough for retirement. So, the number of years left for retirement is a deciding factor of the mutual fund right for a specific individual.
  • Risk Appetite: mutual funds involve risk. However, some have moderate risk while some are highly risky. Whether the investor is cautious or aggressive, mutual funds can be chosen accordingly.
  • Fees: while purchasing mutual funds, checking for the entry fees, exit load and similar type of charges is a must. A few mutual funds with limited assets under management have high charges.
  • Goal: it is important to define one’s goal before choosing a retirement plan. Based on the financial goal of the investor, the portfolio can be formed to bring the necessary diversity.

Phases of retirement savings:

Investing in mutual funds to save for retirement is a long-term goal. There are three main phases that every investment for retirement goes through:

  1. Gather-
  • The gathering phase is all about starting out and accumulating sources for retirement savings.
  • Starting out as early as 22 years old is very beneficial while investing in mutual funds. An equity portfolio which comprises of equity investments with high returns. It suits investors with an appetite for risk.
  • However, for those who are cautious about investing, they can play safe by opting for a mix of equity and equity-oriented hybrid schemes. Or else, the equities can be matched with low volatility debt investments.
  • A portfolio of four to five mutual funds, all through SIP (Systematic Investment Plan) investments is a perfect plan for a retirement portfolio.
  1. Hold-
  • Preserving the money, you make is as important as making it.
  • In this phase, it is recommended that the investor shift the investment from equity instruments to lower volatility debt schemes. However, it shouldn’t be done in one move i.e., not in a lump sum.
  • Opting for an STP (Systematic Transfer Plan) which allows the investor to move the investment in intervals. Through this process of redeeming the investment, the benefit of rupee cost averaging is not lost.
  1. Distribution:
  • The phases hold and distribute go hand in hand.
  • While shifting the investment to low volatility instruments, avoiding dividend plans is important.
  • That is because the dividend plans bring DDT (dividend distribution tax) into the picture which reduces the returns.
  • Instead, by choosing a mutual fund with an SWP option (systematic withdrawal plan), the investor can redeem the returns when required.

Below are the retirement-focused and pension-focused mutual funds to secure your golden years:

Fund Category NAV (in Rs.) Expense ratio (%) 1-year returns (%) 3-year returns (%) 5-year returns (%) SIP/STP option availability
Franklin India Pension Fund– Growth Balanced Hybrid 121.0298 2.34 -0.15 6.63 11.82 Yes/Yes
UTI Retirement Benefit Pension Fund-Regular Plan Balanced Hybrid 25.5874 1.91 -1.07 8.22 10.88 Yes/No
Reliance Retirement Fund – Income Generation Scheme Conservative Hybrid 12.0802 2.36 N.A. N.A. N.A. Yes/Yes
Reliance Retirement Fund – Wealth Creation Scheme– Growth Multi-Cap 12.5579 2.49 -7.28 7.89 N.A. Yes/Yes
Tata Retirement Savings Fund – Moderate Plan – Regular Plan Aggressive Hybrid 28.1684 2.38 -3.81 11.89 19.21 Yes/Yes
Tata Retirement Savings Fund – Progressive Plan – Direct Plan Multi-Cap 29.5199 1.54 -3.70 14.52 20.28 Yes/Yes


  • Each of the above schemes has the option to choose SIP (Systematic Investment Plan).
  • Through SIP, the investor can invest a particular amount of money in a mutual fund at regular intervals.
  • Saving for retirement, being a long-term investment can become a burden on the current income.
  • Through SIP, with small amounts invested consistency, a big corpus can be formed.

Here are the best SIP investments in mutual funds for retirement savings:

  • SIP: Rs 2,000 to 5,000
Fund NAV (in Rs.) Expense ratio (%) 1-year returns (%) 3-year returns (%) 5-year returns (%) For Investors based on risk appetite
SBI Bluechip Fund-growth 36.3351 2.16 -4.18 8.98 16.59 Conservative and moderate  
ICICI Prudential Regular Savings Fund-growth 40.6666 1.86 3.75 8.94 11.50 Conservative and moderate  
SBI Magnum Multicap Fund- Growth 44.3627 2.35 -5.66 10.95 19.36 Aggressive
ICICI Prudential Bluechip Fund- Growth 39.5200 1.96 -0.95 11.51 15.43 Aggressive


  • SIP: Rs 5,000 to 10,000
Fund NAV (in Rs.) Expense ratio (%) 1-year returns (%) 3-year returns (%) 5-year returns (%) For Investors based on risk appetite
UTI Regular Savings Fund – Direct Plan- Growth 41.2390 1.12 3.09 8.53 11.36 Conservative
Motilal Oswal Multicap 35 Fund – Regular Plan- Growth 24.1899 2.04 -7.91 11.32 N.A. Moderate
ICICI Prudential Equity & Debt Fund- Growth 126.2600 1.94 -1.79 11.23 16.60 Aggressive
Mirae Asset Emerging Bluechip Fund – Regular Plan- Growth 48.4650 2.07 -4.62 16.01 28.22 Aggressive
  • SIP: Above Rs 10,000
Fund NAV (in Rs.) Expense ratio (%) 1-year returns (%) 3-year returns (%) 5-year returns (%) For Investors based on risk appetite
Tata Equity PE Fund – Regular Plan- Growth 126.8507 2.01 -7.53 14.12 22.05 Aggressive


Not everyone can afford to start out investing early for retirement. Though being an early bird is important, there are other expenses and savings that need to be done. Mutual funds can save the day for late-starters too. Here are some options for such investors looking for retirement savings options.

  • Age: 51 and 55 Years
Fund Category NAV (in Rs.) Expense ratio (%) 1-year returns (%) 3-year returns (%) 5-year returns (%)
Franklin India Equity Hybrid Fund-growth Equity 112.3904 2.19 -2.74 7.57 14.89
ICICI Prudential Balanced Advantage Fund-growth Equity 33.5300 1.94 1.67 8.61 12.89
SBI Bluechip Fund-growth Equity 36.3351 2.16 -4.18 8.98 16.59
Mirae Asset India Equity Fund – Regular Plan-growth Equity 46.8670 2.03 -0.85 13.78 19.50


  • Age: above 56 years
Fund Category NAV (in Rs.) Expense ratio (%) 1-year returns (%) 3-year returns (%) 5-year returns (%)
Aditya Birla Sun Life Balanced 95 – Growth Equity N.A. N.A. 9.97 12.32 16.72
Aditya Birla Sun Life Short Term Opportunities Fund – Regular – Growth Debt 29.8860 1.13 1.13 7.54 8.56
DSP Blackrock Credit Risk Fund–Regular Plan–Growth Debt 28.3664 1.69 0.84 6.16 7.88
ICICI Prudential Balanced Advantage Fund – Regular – Growth Equity 33.5300 1.94 1.67 8.61 12.89
Mirae Asset India Equity Fund – Regular – Growth Equity 46.8670 2.03 -0.85 13.78 19.50


ELSS mutual funds for retirement:

  • The equity diversified mutual fund scheme is a hot cake among mutual funds being a tax-saving instrument. It has the shortest lock-in period of three years following which it becomes an open-ended scheme.
  • ELSS mutual funds can gain from tax benefits under Section 80C of the Income-tax Act. A tax deduction of up to Rs 1.5 lakh can be availed for investments in ELSS mutual funds.
  • This tax-saving mutual fund can help the investor in creating wealth in long-term which is why ELSS mutual funds are suitable for retirement savings.

Here are the best ELSS mutual funds to consider for a retirement portfolio:

Fund NAV (in Rs.) Expense ratio (%) 1-year returns (%) 3-year returns (%) 5-year returns (%)
Motilal Oswal Long-Term Equity Fund-Direct Plan-growth 16.8799 1.25 -5.66 14.30 N.A.
L&T Tax Advantage Fund – Direct Plan-growth 54.8210 1.55 -4.22 13.28 18.13
Tata India Tax Savings Fund – Direct Plan-growth 17.1737 1.14 -6.01 12.09 19.87
IDFC Tax Advantage (ELSS) Fund – Direct Plan-growth 56.3500 1.04 -5.43 13.27 18.96
Aditya Birla Sun Life Tax Relief 96 – Direct Plan-growth 31.3900 1.07 -1.94 13.28 21.01


Build a balanced portfolio based on your goals, time, and financial ability. Diversity is the key to success and safety. Mutual funds, with their diversity and high-returns, can be the perfect match for your retirement savings plan.