I am retiring with ₹2 crore including my PF. How should I split it?

You have worked thirty-odd years for this number. The PF statement, the gratuity, the FDs you built quietly over the years, all of it adds up to around ₹2 crore. It feels like a lot of money and, at the same time, it feels fragile, because there will be no new salary to top it up.

Everyone around you will have an opinion. A relative will say "put it all in FDs". A bank relationship manager will have a plan ready on the day the money lands. The honest answer is simpler: split the money by when you will need it, and give each part one clear job.

Why split by time instead of by product?

The biggest risk in retirement is not choosing a slightly worse product. It is being forced to sell something at a bad moment to pay next month's bills. If your next three years of expenses are already sitting somewhere safe, a market fall or a rate cut does not touch your daily life.

That is the idea behind the "bucket" approach:

• Bucket 1 (years 1–3): money you will spend soon. Safe and easy to withdraw.
• Bucket 2 (years 4–8): money that should be stable and pay a steady income.
• Bucket 3 (year 9 onwards): money that has time on its side and can grow, with ups and downs.

Each year, you refill Bucket 1 from the other two.

Step 1: Health cover and loans come before any split

Before you invest a rupee, two things need settling.

Health cover. Many people lose their employer group cover on the day they retire. A family floater in your own name, ideally with a top-up, should be in place first; one hospital stay can undo years of careful planning. Since 22 September 2025, GST on individual health insurance premiums is nil, which helps a little. Keep a separate medical reserve as well, because policies have waiting periods and exclusions.

Costly loans. If a personal loan or a car loan is still running, closing it is usually a better use of part of the lump sum than an FD earning less than the loan costs. The costliest loan goes first. Our guide on where to keep PF and gratuity money covers the first ninety days in more detail.

Step 2: Bucket 1, the next three years of income

This money must be boring. Think of a savings account with an auto-sweep facility, a liquid fund (a mutual fund that holds only very short-term debt, with maturities up to 91 days), and an FD ladder: FDs of one, two and three years, so that one matures every year.

Two practical points. Bank deposits are insured by DICGC only up to ₹5 lakh per depositor per bank, so spread larger amounts across a few banks. And FD rates are moving: the RBI raised the repo rate to 5.50% on 7 October 2026, and banks are repricing. At the time of writing, one large public-sector bank was offering senior citizens roughly 6.75% to 7.05%, depending on tenure.

Step 3: Bucket 2, stable government schemes and debt

This bucket carries most of your steady income. Rates below are for October–December 2026.

• SCSS (Senior Citizens' Savings Scheme): 8.2% a year, paid quarterly, up to ₹30 lakh. The rate on the day you open the account stays fixed for its tenure.
• Post Office MIS (Monthly Income Scheme): 7.4% a year, paid monthly, up to ₹9 lakh in a single account or ₹15 lakh in a joint one.
• RBI Floating Rate Savings Bonds: 8.05% for July–December 2026; the rate resets every six months.
• Short Term debt funds (the SEBI category formerly called "short duration"): for money you can leave alone for a few years. Gains on debt funds bought after April 2023 are taxed at your slab rate.

Interest from SCSS, MIS, bonds and FDs is all taxable as income. Senior citizens have a higher TDS threshold of ₹1 lakh a year on bank and post-office interest, and can file Form No. 121 (which replaced Forms 15G and 15H) if no tax is payable on their total income.

Step 4: Bucket 3, a limited share for long-term growth

Your expenses at 75 will be far higher than at 60, simply because of inflation. Indian consumer inflation has averaged about 4.7% a year over the last ten years and about 6.5% over the last twenty. Money that only earns fixed interest, after tax, struggles to keep pace over twenty-five years.

So a minority of the corpus, money you will not need for eight years or more, can go into diversified equity, for example a large-cap index fund or a flexi-cap fund, alongside some debt. Over long periods, equity has been more volatile than FDs and has historically done better, but there is no guarantee and there will be years when it falls sharply. That is exactly why it sits in the last bucket.

What could a ₹2 crore split look like?

Illustration: A couple, both 60, spend about ₹80,000 a month (₹9.6 lakh a year). They have ₹2 crore after clearing a small car loan, and both have health cover in place. Rates are as of October 2026 and are not a forecast. (Illustrative numbers, not a real client.)

How the income works in this illustration: SCSS, MIS and the bonds together pay about ₹4.78 lakh a year before tax, roughly half of the ₹9.6 lakh the couple spends. The other ₹4.8 lakh or so comes from the FD ladder in Bucket 1, which at that pace lasts around six years. Bucket 2's debt funds and, after good years, Bucket 3 refill it.

The equity share here is about 30% of the total. Someone more cautious might keep it at 20%; someone with a pension might go a little higher. None of these figures is an income you can count on; rates change, and the plan should be revisited every year.

What mistakes do people make with a retirement lump sum?

• Putting everything in one place, whether all FDs or all in one "pension plan" pitched on the day the money arrives.
• Locking money that may be needed, such as in a long-term insurance product, when the medical reserve is thin.
• Taking a monthly income higher than the plan can bear in the first few years.
• Forgetting tax and inflation when checking whether the income is enough.

If you are not sure whether ₹2 crore is enough for your expenses at all, start with how much money you need to retire, and then see how to turn savings into a monthly pension.

The order matters as much as the split: health cover, then loans, then the near-term bucket, then the rest. This ordering is exactly what we map in a first conversation. Where the decision comes down to a specific fund or product, that advice should come from a SEBI-registered adviser who has looked at your full situation.