The pension that arrived before the milkman's bell

Madhu ben taught mathematics at a school near Commerce Six Roads for thirty-one years. When she retired at 60 in 2021, her provident fund, gratuity and leave encashment arrived as one number she had never seen in her life: about ₹72 lakh. With the ₹38 lakh she and her husband already held in joint fixed deposits, the household had roughly ₹1.10 crore. Her son, careful and loving, said: "Put it in FD, mother. Nothing riskier."

For the first year that felt wise. Then FD rates dipped, the interest started feeling smaller every month, and she noticed she was breaking deposits for medical bills. A lump sum in a fixed deposit is not income. It is a countdown.

What a pension actually is

A pension plan is not an investment chasing returns. It turns money you have into a monthly payment that cannot run out. A fixed deposit gives you interest from a pile that shrinks every time you dip into it. A guaranteed annuity like LIC Jeevan Akshay VII pays the same amount whether interest rates rise or fall, for as long as you live.

When Madhu ben came to my Shela office, we did one honest thing first. We wrote down the household’s monthly expenses: groceries, medicines for both of them, electricity, society maintenance, the temple fund, the kitchen help, and a health insurance premium paid once a year but counted monthly. It came to ₹45,000. Then we wrote down the income already guaranteed: her husband’s co-operative bank pension of ₹16,000 and ₹9,000 rent from the shop he had built. ₹25,000. The ₹20,000 gap was the pension we had to buy.

"Beta, I do not want more money. I want the same money, every month, in my hand."

— Madhu ben (name changed), retired school teacher, Ahmedabad

The structure we chose, in plain words

We put ₹45 lakh into Jeevan Akshay VII, the immediate annuity where the pension starts the next month at a rate locked on day one. We chose the joint-life option, so the full pension continues for whichever of them lives longer, and return of purchase price, so the ₹45 lakh goes to their son after both of them are gone. At the rate then, about 5.9% a year, that bought a pension of roughly ₹22,000 a month, a little above the gap so there is room for price rises in the early years.

Each of them put ₹15 lakh in the Senior Citizens’ Savings Scheme, the limit at the time. That interest is not spent; it is the reserve for higher expenses later. The remaining ₹35 lakh stays in fixed deposits for hospital bills and emergencies. And we agreed on one future step: when expenses outgrow the pension, around age 68, a second smaller annuity will be bought from the reserve.

Today the pension arrives in her account at the start of every month, before the milkman rings her bell. The amount is the same in January and in July. She has not asked her son for money since 2021, and he has not offered. Both facts matter to her.

Three numbers to calculate before you retire

If you are within five years of retirement in Ahmedabad, do not wait for the last day. Calculate three numbers now: (1) your true monthly expenses, from a real list with medicines included, not a guess; (2) the income already guaranteed, such as a pension, rent or an existing annuity; (3) the gap between them. The gap is what a pension plan must cover.

A quick estimate of the corpus needed: at an annuity rate of about 6%, every ₹1,000 of monthly pension needs roughly ₹2 lakh. So a ₹20,000 gap needs about ₹40 lakh, and a ₹50,000 gap about ₹1 crore. Rates change with age, the options you choose and the interest rate environment, so we always get an exact quote from LIC before you commit a rupee. Remember that annuity income is taxable as income in your hands.

Retirement planning in India is not a product. It is arithmetic done on time. If you would like the arithmetic done with you, free of cost, call or WhatsApp +91 98240 25435. We will do it on one sheet of paper, the way we did with Madhu ben.

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