How to Get Monthly Income After Retirement in India: SWP vs SCSS vs Annuity vs FD (2026)

Monthly income after retirement: SWP vs SCSS vs annuity vs FD

The information on this page is for educational purposes only and should not be construed as investment advice.

Building a retirement corpus is half the job. The other half starts on the day your salary stops: how do you turn a lump sum into a monthly income that lasts 25–30 years and keeps up with rising prices?

The short answer: no single product does all of this. Guaranteed options (SCSS, POMIS, FDs, annuities) give certainty but lose value to inflation. Market-linked options (mutual fund SWPs) can keep up with inflation, but the income isn't guaranteed. Most workable retirement income plans combine both.

1. The Five Main Options at a Glance

Option	Income (illustrative)	Taxation	Liquidity	Keeps pace with inflation?
Senior Citizen Savings Scheme (SCSS)	8.2% p.a., paid quarterly	Interest fully taxable at slab	5-year lock-in; penalty on early exit	No — payout fixed for 5 years
Post Office Monthly Income Scheme (POMIS)	7.4% p.a., paid monthly	Interest fully taxable at slab	5-year lock-in; penalty on early exit	No
Bank Fixed Deposit	~6.5–7.5% for senior citizens (varies by bank)	Interest fully taxable at slab	Breakable, with a penalty	No
Annuity (pension plan from an insurer)	~6–7% of purchase price (varies by age and option)	Fully taxable at slab	Generally irreversible	Usually no (fixed payout)
Mutual Fund SWP	You choose the amount	Only the gains portion is taxed	High — withdraw or stop any time	Can, if the corpus keeps growing

SCSS and POMIS rates are the government-notified rates for the current quarter — see our National Savings Schemes rates page. FD and annuity ranges are indicative and change with interest-rate cycles.

2. What ₹1 Crore Actually Pays You Each Month

Suppose you retire at 60 with a ₹1 crore corpus. Here's roughly what each route would pay (before tax):

Route	Monthly income	What happens to the ₹1 crore
SCSS (₹30 lakh limit per person)	~~₹20,500 on ₹30 lakh (~~₹41,000 for a couple on ₹60 lakh)	Returned at maturity
POMIS (₹9 lakh single / ₹15 lakh joint)	~₹5,550 / ~₹9,250	Returned at maturity
FD at 7%	~₹58,300	Returned at maturity
Annuity at 6–7% (life annuity, no return of purchase price)	~₹50,000–58,300	Paid out as income for life; nothing left for heirs
SWP rising with inflation (6% a year) at an 8% return	~₹37,000 to start, lasting ~30 years	Gradually drawn down

Look at the last row. It starts lower than the others, but it's the only one that rises every year. A fixed ₹58,300 today buys only about ₹24,300 worth of today's goods after 15 years at 6% inflation, and about ₹18,200 after 20 years. A fixed income that looks comfortable at 60 can feel tight by 75.

Use our SWP Calculator to model your own corpus, withdrawal amount and return assumption.

3. Option by Option: What Each One Is Good For

SCSS: A Government-Backed Income Base

Eligibility: 60 and above (55+ for those who took VRS, with conditions).
Limit: ₹30 lakh per person; a couple can hold ₹60 lakh in separate accounts.
Good for: a predictable quarterly income backed by the Government of India.
Watch out for: the payout is fixed for 5 years, it's fully taxable, and TDS applies once interest crosses ₹1 lakh a year.

POMIS: A Small Monthly Top-Up

POMIS pays monthly rather than quarterly, but the ₹9 lakh (single) / ₹15 lakh (joint) cap makes it a top-up rather than a main source of income. POMIS details →

Bank FDs: Flexible but Tax-Heavy

FDs have no upper limit and flexible tenures, and senior citizens usually get an extra 0.25–0.50%. But interest is taxed every year whether or not you spend it, and reinvesting at maturity exposes you to whatever rates prevail then.

Annuities: Guaranteed Income for Life

An annuity turns a lump sum into a guaranteed lifelong income, so you can't outlive it. It's also usually a one-way door: once you buy a life annuity, you generally cannot get the capital back. Options with "return of purchase price" to nominees pay a lower income. NPS subscribers must buy an annuity with part of their corpus at exit — see NPS exit rules and our primer on annuities.

Mutual Fund SWP: Income That Can Grow

A Systematic Withdrawal Plan redeems a fixed amount from your mutual fund every month while the rest stays invested.

Tax-efficient: only the gains portion of each withdrawal is taxed, not the whole payout.
Flexible: you can raise, reduce or pause withdrawals.
The risk: market-linked returns aren't guaranteed. A sharp fall early in retirement, combined with high withdrawals, can shorten how long the corpus lasts ("sequence risk").

4. Tax: Why Two Equal Payouts Can Leave Different Amounts in Hand

Taxed in full at your slab rate: SCSS, POMIS, FD interest and annuity income. The whole amount counts as income.
SWP from equity-oriented funds (held over 12 months): only the gains part of each withdrawal is taxed, at 12.5%, and the first ₹1.25 lakh of such gains each year is exempt.
SWP from debt funds bought on or after 1 April 2023: gains are taxed at your slab rate, but again only the gains portion, not the capital you're withdrawing.

For many retirees on the new tax regime, total taxable income stays within the rebate limit. Still, a ₹60,000 monthly FD income and a ₹60,000 monthly SWP can leave quite different amounts in hand once you're above it. Tax rules change often; check the position for your own income before you decide.

Not sure how to split your corpus?

How much should go to SCSS, how much to an annuity, and how much should stay invested for growth depends on your expenses, other pensions, health cover and tax position. Message us on WhatsApp and we'll walk through your numbers with you — no obligation.

Discuss my retirement income plan on WhatsApp

5. Putting It Together: The Bucket Approach

Rather than choosing one product, many retirees split their corpus by when they'll need the money:

Bucket	Covers	Typical instruments	Purpose
1 – Now	Next 2–3 years of expenses	Savings account, liquid funds, short FDs	Pays the monthly bills; never has to be sold in a market fall
2 – Soon	Years 4–10	SCSS, POMIS, FDs, debt or conservative hybrid funds	Stable income; refills Bucket 1
3 – Later	Year 10 onwards	Equity and balanced-advantage-style hybrid funds	Long-term growth to beat inflation; refills Bucket 2

Illustration for a couple with ₹2 crore and ₹75,000/month expenses:

Bucket 1: ~₹25 lakh, close to 3 years of spending.
Bucket 2: ₹60 lakh in two SCSS accounts (~₹41,000/month of interest), plus ~₹35 lakh in debt/hybrid funds.
Bucket 3: ~₹80 lakh in equity-oriented funds, left untouched for a decade, with an SWP or periodic transfer used to top up Buckets 1 and 2.

This is an illustration, not a recommendation. The right split depends on your other income, risk tolerance and health.

6. Common Mistakes

❌ Putting everything in FDs. It feels safe, but a fixed income slowly loses real value over a 25–30-year retirement.
❌ Annuitising too much, too early. It's irreversible, and today's annuity rate stays locked for life.
❌ Withdrawing too much from an SWP. A starting withdrawal much above 4–5% of the corpus a year, rising with inflation, risks running the money out.
❌ Ignoring the health budget. Medical costs rise faster than general inflation. See Healthcare Costs After 60.
❌ Not reviewing. Rates, tax rules and your spending change. Revisit the split every year or two.

Where a growth or return rate is shown, it is a simplified assumption included for illustrative purposes only. It is not guaranteed, not assured, and does not represent the historical or expected performance of any specific scheme, category, or asset class.

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Frequently Asked Questions

How can I get a monthly income after retirement in India?

The main options are the Senior Citizen Savings Scheme (SCSS), the Post Office Monthly Income Scheme (POMIS), bank fixed deposits, annuity plans from insurers, and Systematic Withdrawal Plans (SWP) from mutual funds. Most retirees combine two or more: a guaranteed base from SCSS/POMIS or an annuity, and an SWP for the portion that needs to keep growing against inflation.

How much monthly income will ₹1 crore give after retirement?

At an illustrative 7% FD or annuity rate, ₹1 crore gives roughly ₹50,000–58,000 a month before tax, but that amount stays fixed while prices rise. If you want the income to rise 6% a year with inflation and last 30 years, an illustrative 8% return supports a starting withdrawal of only about ₹37,000 a month.

Is SWP better than an annuity for retirement income?

They solve different problems. An annuity guarantees income for life but is usually fixed, taxable at your slab rate, and irreversible. An SWP keeps your corpus invested and accessible, is usually more tax-efficient because only the gains portion of each withdrawal is taxed, but income is not guaranteed and depends on market returns. Many retirees use both.

How much can I invest in SCSS and how much income does it give?

SCSS allows up to ₹30 lakh per individual (₹60 lakh for a couple in separate accounts) at 8.2% per annum for the current quarter. ₹30 lakh gives about ₹61,500 per quarter, or roughly ₹20,500 a month. The interest is fully taxable at your slab rate and is fixed for the 5-year tenure.

Is FD interest or SWP taxed more after retirement?

FD, SCSS, POMIS and annuity income is taxed in full at your slab rate every year. In an SWP, each withdrawal is partly your own capital (not taxed) and partly gains; equity-oriented fund gains held over 12 months are taxed at 12.5% above ₹1.25 lakh a year. Debt fund gains on units bought from April 2023 onwards are taxed at slab rate.

What is the bucket strategy for retirement income?

The bucket strategy splits a retirement corpus by when you will need the money: about 2–3 years of expenses in liquid or savings instruments, the next 5–7 years in stable income options like SCSS, FDs or debt/hybrid funds, and the rest in equity for long-term growth. You refill the near-term buckets from the growth bucket periodically.