Daybreak - Your retirement may not survive its first bad year. This number could help

Episode Date: May 4, 2026

Market shocks hit retirees harder than anyone else. For those just retired or on the verge of it, a sharp early drop in portfolio value can cause damage that compounds quietly over decades, long after markets recover.The American war in Iran is the latest trigger. And it may not be the last.The good news: careful planning can offset the risk. A concept called the safe withdrawal rate, used correctly, can be the difference between a corpus that lasts 30 years and one that runs out in 20.Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Somewhere in India right now, a person who spent 35 years carefully saving money is watching their retirement coppers shrink and wondering if they should have saved more. Markets have already shed 10% this year. First, it was COVID, a few years later came the tariff shocks, and now the American War in Iran is pushing stocks down again. See, for most investors, a sharp correction is painful, yes, but survive. You hold on and you just wait it out. The market eventually comes back. But for someone who just retired or is about to, this particular kind of pain lands differently. They are already

withdrawing from their corpus. Every month, money is leaving their portfolio. And if the market falls hard in those early years, the math turns brutal. There is less capital left to recover when things eventually improve. Even if the long-term average returns look perfectly healthy on paper, the damage from those early losses can compound quietly until the money simply runs out. This is called sequence of returns risk. Most people, including me, had never heard of it until my colleague Anand Kalyanah Raman wrote about it recently. Also, turns out most retirement calculators in India completely ignoring. The 1992-Harshet Mehta scam wiped out 50% of the market in a year.

The 2008 global financial crisis took another 60% off. COVID crashed everything in weeks. In each of these events, retirees who thought their savings were adequate found out that they were quite wrong. The researchers who studied these crashes found something striking. The difference between a retirement corpus that lasts 30 years, years and one that runs out in 20 often came down to one single number. And most people either pick it wrong or have never heard about it at all. Welcome to Daybreak, a business podcast from

the Ken. I'm your host, Nick Da Sharma and I don't chase the new cycle. Instead, every day of the week, my colleague Rachel Vargheese and I will come to you with one business story that is worth understanding and worth your time. Today is Monday the 4th of May. The safe withdrawal rate, or SWR, is a simple idea. It is the percentage of your corpus that you can withdraw in year one, top up with inflation every year after and still never run out of money. Ravi Saragi, a registered investment advisor and co-founder of Samastati advisors, puts it quite simply.

This is the number that keeps you from outliving your savings. Here is what it looks like in practice. somebody retires at 60 with a corpus of 1 crore rupees and expects to live for 30 more years. A safe withdrawal rate of 3.3% means withdrawing roughly 3.3 lakhs in year 1 and adjusting for inflation every year after that. Push that to 4 lakh rupees of 4% withdrawal rate and the corpus is likely to run dry well before the age of 90. In the US, the widely accepted safe withdrawal rate or SWR is 4%. But Saragi and Rajan Raju, an I.I.M. Ahmedabad alumnus, an ex-banker who runs in Westpar

PTE, a Singapore-based single-family office, argue that applying the same figure to India is a mistake. Their research built on actual Censex data, fixed deposit rates and CPI inflation through December 2025 puts the appropriate range for India at 3 to 3.3.3.3. The reason is straightforward. Indian markets are volatile. Inflation behaves differently here. The simulation, thousands of them, run across different combinations of returns and market conditions consistently show that anything above 3.5% starts introducing meaningful

risk of failure. Saraghi studied every major market crash in India over the last 30 years and mapped what each one would have done to a retirees corpus under different withdrawal rates. A retiree in 1992, when the Harshad Mehta scam broke, would have sailed through a 30-year retirement with a 3.5% SWR. At 4%, the corpus would have been exhausted by the 25th year. A person who retired in January 2008, just as the global financial crisis began, would have survived on 3%. At 3.5 to 4%, the portfolio, dips into failure. The COVID crash analysis tells a similar story. Three to three point five percent

holds and four percent does not. Saraghi is unequical about the advisors who recommend withdrawal rates of six or seven percent. He says they are way off the mark and could cause serious harm to the people that they are advising. He also recommends planning for at least 30 years of retirement and not 20 or 25 years, especially as life expectancy rises. So basically, the cost of underestimating how long you will live is quite steep. Next up, the part that feels counterintuitive. Stay tuned. Many people assume that putting more money into equities will make their retirement

corpus grow faster and last longer. The data, though, says otherwise. Increasing equity allocation beyond 50% does not. improve the safe withdrawal rate or SWR. It increases sequence of returns risk. More equity means more volatility. And more volatility in the early years of retirement is precisely the problem that you are trying to avoid. Consider someone who retired in 2008 with 70% of their cop is in equity. Even at a conservative SWR of 3%, the outcome would have been a failure. A retiree in 1992 with 60% 60% in equity would have struggled to recover from the early crash even at 3.5% SWR.

The recommendation is to cap equity at 50% and to start trimming it 5 to 7 years before you retire. Rebalancing should continue through retirement to keep the split roughly intact even as markets move. Saraghi has simplified the whole calculation down to two inputs. Listen carefully. Equity allocation and retirement period. A 50% equity allocation over 30 years points to an SWR of 3.46%. The corpus itself needs to be calculated the right way. Most financial planners use what is called a deterministic model. It assumes equity returns of 12%, debt at 7% and inflation at 5% all constant year after year. year. For someone with annual expenses of 12 lakh rupees, that model estimates a required corpus

of 2.4 crore rupees. A stochastic model, on the other hand, is one that runs thousands of simulations using real variable returns and inflation. And it puts the same number at over 3.8 crore rupees. So, you see, the deterministic model is simpler. The stochastic model is closer to reality. And the gap between them is where retirement plans fail. For most people who cannot build a multi-crow corpus, there are dynamic withdrawal strategies. One approach is to simply skip the inflation adjustment after a bad market here. Keep withdrawals flat, giving the portfolio room to recover. More structured approaches like bucket strategies and guardrail methods factor in risk tolerance and lifestyle needs. The trade-off with all the

All of them is the same. You give up predictable, steady income in exchange for a corpus that lasts longer. Retirement planning in the end is a survival exercise. And running out of money is the one outcome that there is no coming back from. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the ken.com and click on the red subscribe button on the top of the website.

Today's episode was hosted and produced by my colleague Snitha Sharma and edited by Rajiv CN.