As life expectancy increases and pension coverage shrinks, building a retirement corpus isn’t enough — making it last a lifetime is the real challenge. Rising medical costs, inflation, and market fluctuations can quickly deplete savings unless your retirement portfolio is built to endure all life stages.
That’s where a pyramidal retirement framework comes in — a structured plan with three distinct layers for safety, stability, and long-term growth.
Layer 1: Safety and Liquidity (50–60% of corpus)
The foundation ensures uninterrupted monthly expenses and emergency access with minimal risk.
Ideal investments include:
Liquid and ultra-short debt mutual funds
Senior Citizen Savings Scheme (SCSS)
RBI Bonds
SWPs with short-duration funds
Overnight or arbitrage funds as emergency buffers
This layer provides peace of mind and quick access to funds without market-linked volatility.
Layer 2: Stability and Moderate Growth (25–30%)
This middle layer aims to preserve purchasing power by beating inflation with moderate risk.
Best choices:
Multi-Asset Allocation mutual funds
High-quality corporate bond funds
Conservative PMS (Portfolio Management Services) offering regular payouts
This is your reliable mid-term income source and inflation hedge.
Layer 3: Long-Term Growth (10–15%)
The top layer fuels your corpus for the long run and helps leave a financial legacy.
Recommended options:
Flexi-cap, large-cap, and mid-cap equity mutual funds
Balanced Advantage Funds
High-quality equity PMS for HNIs
Use this layer sparingly in the early years of retirement and let it grow to fight long-term inflation and provide legacy capital.
Smarter Returns Need Smarter Strategy
A successful retirement plan isn’t just about picking products — it’s about strategy:
Diversify across equity, debt, and gold
Control risk by avoiding high-return traps and focusing on inflation-beating growth
Optimise taxes by utilising LTCG exemptions and harvesting losses to lower liabilities
Tax tip: LTCG from equity mutual funds up to ₹1.25 lakh annually is tax-free — spread withdrawals to stay under this limit.
NPS: A Must-Have Retirement Tool
The National Pension System (NPS) remains a powerful and underutilized tool:
Withdraw up to 60% tax-free at retirement
Use 40% to buy an annuity for lifetime income
New SLW feature allows tax-efficient staggered withdrawals, avoiding market timing risks
Pro tip: Opt for Active Choice during working years to get higher equity exposure and better long-term growth than the Auto Choice option.
Mistakes to Avoid
Relying only on annuities with low returns
Ignoring healthcare inflation — always have health insurance and a medical emergency fund
Locking funds in illiquid products like real estate or ULIPs
Skipping estate planning — create a will, assign nominees, and consider a family trust
Financial Freedom, for Life
A large corpus doesn’t guarantee comfort — but smart structuring, strategic allocation, and tax planning do. The pyramid approach ensures a steady income, liquidity in crises, and long-term capital growth. Done right, your retirement fund won’t just last a lifetime — it’ll also support your legacy.
