The ₹10 crore myth: Here's how inflation and taxes can derail your FD retirement plan 

A ₹10 crore retirement corpus may sound like the ultimate safety net — but according to investment banker Sarthak Ahuja, relying entirely on fixed deposits (FDs) could leave retirees financially vulnerable over time. 

In a detailed LinkedIn post, Ahuja breaks down the math behind a seemingly “comfortable” retirement plan — and explains why it may fall short in the long run. 

Illusion of high passive income 

At a 7% annual return, ₹10 crore invested in FDs would generate ₹70 lakh per year. However, taxation significantly eats into this income. With an effective tax rate of around 27%, nearly ₹20 lakh goes toward taxes, leaving about ₹50 lakh annually. 

That translates to roughly ₹4.2 lakh per month—a figure that appears more than sufficient today. For many upper middle-class households in Indian metros, a monthly spend of ₹2.5 lakh can ensure a comfortable lifestyle. 

Inflation: The silent wealth eroder 

The real challenge, Ahuja argues, is inflation. 

Assuming a 5% annual inflation rate — historically closer to 6% in urban India — expenses can rise sharply over time: 

• ₹2.5 lakh/month today becomes over ₹4 lakh in 10 years 
• In 20 years, it approaches ₹6.5 lakh/month 

This means that while income from FDs may remain relatively static, the cost of living continues to surge, eventually outpacing earnings. 

The interest rate risk 

Another key concern is declining interest rates. As economies mature, fixed deposit returns tend to fall. Ahuja suggests that FD rates in India could realistically drop to around 4% over the next decade. 

At that level, ₹10 crore would generate significantly lower returns. Post-tax monthly income could fall to around ₹3 lakh — while expenses, driven by inflation, may already exceed ₹4 lakh. This creates a financial deficit within just 10 years of retirement. 

More balanced retirement strategy 

To counter these risks, Ahuja recommends a diversified investment approach rather than relying solely on fixed-income instruments. His suggested allocation for a ₹10 crore corpus includes: 

• 50% in equities or index funds delivering 10–12% annual compounding 
• 30% in fixed-return assets like FDs, providing stability and steady income 
• 20% in gold or real estate, offering diversification and capital appreciation 

This mix aims to balance growth, income, and risk — helping retirees keep pace with inflation while maintaining financial security. 

Beyond numbers: Personal factors matter 

Ahuja emphasises that there is no one-size-fits-all strategy. The ideal allocation depends on several factors: 

• Retirement age 
• Lifestyle expectations 
• City of residence 
• Family structure 
• Existing assets like a primary home 
• Insurance coverage, especially for healthcare 

Even a ₹10 crore corpus — often seen as a benchmark for financial freedom — may not be enough if it is poorly structured. The key takeaway: safety alone does not guarantee sustainability.