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Plot no. 129/1 Industrial Area Phase 1, Chandigarh


  • Tejinder Kohkar

Retirement Planning with mutual funds-Best strategy to mitigate risks

Why should you emphasize Retirement Planning?

Retirement planning is an essential aspect of an individual’s life. The retirement funds should be planned in such a way that will help us to lead a decent lifestyle. Hence, finding a tool for retirement investing becomes critical, and the plan should start fructifying a considerable time before actual retirement. Proper retirement planning helps us narrow down the options for achieving our long-term retirement goals. Calculate

Critical risks such as inflation which reduces the purchasing power of money is a double whammy during planning for retirement savings. With rising age, health expenditure increases and although prudent planners have medical insurance as a shield but many a times our health insurer may not cover the entire amount. All these considerations with no pension at retirement stage actually compounds the problem many fold. There is no safety net and retirement planning becomes of paramount importance.

In order to clearly craft a long-term retirement goal, we need to go back to the drawing board. We should prepare a list of all your expenses and assume an inflation of almost 5% year on year. The corpus needs to locked with a tolerance band of 10%-20% above this inflation adjusted expenses. The tolerance band is for unforeseen circumstances. Backtracking the same, we need to allocate our retirement investing and come out with an instrument that can allow us to accumulate funds for retirement.

The instrument which fits the criteria for long-term retirement goals is mutual funds. Since our risk appetite gets lower with age, selecting the best mutual funds for retirement is imperative. The mutual funds in which the portfolio gets diversified into different sectors are the best mutual funds for retirement. These funds for retirement aid in building a sizeable retirement savings corpus with a steady annualized cash flow in future.


Some of the most important factors to be considered:

The modularity that retirement funds in the form of mutual funds provide is unparalleled. Traditional pension funds, fixed deposits, and bonds have a normally fixed tenure before which you cannot withdraw your corpus. While on the other hand, the best mutual funds for retirement help you to redeem your funds in case of any emergency and, at the same time, provide enough liquidity to switch to other better-performing mutual funds for retirement.

Mutual funds are exceedingly transparent, and you get the minutest of details across various platforms on the internet. For someone doing their retirement planning with their hard-earned savings, it becomes extremely beneficial to have all the information in one go. In order to ensure a steady stream of income, it becomes imperative to select the best mutual funds for retirement while hedging the risks ahead.

Many investors have a habit of ignoring tax consequences in their retirement investing strategy, but it can erode a significant portion of their wealth. Retirement investing through mutual funds helps in tax saving. Long-term capital gains in equities mutual funds are tax-free up to Rs 1 lakh. Long-term capital gains (investment holding period of more than 3 years) from debt funds or debt-oriented hybrid funds while planning the best mutual funds for retirement are taxed at 20% after allowing for indexation benefits.


Best Mutual funds for retirement.

Some of the notable mutual funds which give a safety net along with optimum returns are mentioned below:

  • SBI Retirement Benefit Fund-Aggressive Plan

  • SBI Retirement Benefit Fund-Aggressive Hybrid Plan

  • HDFC Retirement Savings Fund-Equity Plan

  • ICICI Prudential Retirement Fund – Pure Equity Plan

  • HDFC Retirement Savings Fund – Hybrid Equity Plan

  • Tata Retirement Savings Fund Progressive Plan Regular Growth

  • ICICI Prudential Retirement Fund – Hybrid Aggressive Plan

  • Axis Retirement Savings Fund-Dynamic Plan

  • SBI Retirement Benefit Fund- Conservative Hybrid Plan

These funds have delivered an annual return ranging from 10.4% to 21.56% as of mid-November 2022.

By no means this is an exhaustive list. These are some of the best performing retirement mutual funds till now based on the portfolio and the level of risk that these funds invest in. We should do your due diligence with respect to our expenditure, risk appetite, taxation benefits and other important factors.


Concluding remarks:

Retirement planning becomes extremely important to mitigate the challenges old age throws at us be it high inflation, unexpected medical expenditures, increasing tax liabilities along with no safety net of pensions and other income streams. Somehow, retirement planning takes a back seat and other life events such as children’s marriage, education, job stress takes precedence. This actually delays our response mechanism and we tend to cope with a reactive mechanism rather than with a proactive one. We lose our financial independence in the process and end up as a financial burden on our children which dents our self-respect and dignity. This can be mitigated with proper retirement investment strategies in place and performing extensive research on the kind of portfolio in equity or debt retirement mutual funds that ensures an optimum combination of returns, stability and taxation benefits.

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