Just retired? A financial checklist for year one

Why year one matters more than it looks

Retirement turns a salary into a pile of money, and those are managed very differently. A salary refills itself every month. A corpus doesn't. The decisions made in the first twelve months, about where the lump sum sits, how income is drawn and how much risk remains, tend to stay in place for a decade, often by inertia.

This is a checklist, in roughly the order it should be done.

Month 0–1: collect, park, and do nothing clever

Make a list of every payout and its date. Provident fund final settlement, gratuity, leave encashment, superannuation, any NPS exit, maturing deposits or policies. Write the amount, the date and the account it lands in. Retirement money arrives in pieces, over weeks, and it is easy to lose track.

Park it all in one boring place. A liquid or overnight fund, or a bank sweep-in deposit, is fine. On NAVs to 1 October 2026, Direct-plan liquid funds returned a median 6.47% over the past year and overnight funds 5.25%, with volatility of 0.17% and 0.11% respectively, which is close to none. The point of this step is not return; it is to stop the money from leaking into a hurried decision.

Say no to anything sold in the first month. Retirement is when insurance-cum-investment plans, high-yield "schemes" and requests for loans arrive. A good product will still be available in three months.

Month 1–2: work out what you actually spend

The plan rests on one number: your monthly spending in retirement. Not the salary you earned, the money you spend.

• Take the last 12 months of bank and card statements and total them.
• Remove costs that stop at retirement (commuting, work clothes, EMIs that end).
• Add what starts or grows: health insurance premiums paid by you rather than an employer, medical costs, travel, help at home.
• Add a separate line for lumpy annual costs: insurance renewals, property tax, festivals, a car replacement every eight to ten years.

Then check the corpus against it. The retirement calculator and our guide on how much retirement corpus you need both work from this number.

Month 2–3: build an income floor

The aim is to make the fixed part of monthly spending come in automatically.

1. Count the guaranteed income first: pension, annuity, rent. Whatever spending that covers needs no investment decision.
2. Fill the government schemes you are eligible for. The Senior Citizens' Savings Scheme pays 8.2% a year (the rate notified for October–December 2026), quarterly, on up to ₹30 lakh per person. We compare it with mutual funds in SCSS vs mutual funds for retirement income.
3. Keep one to two years of spending in a liquid or money market fund. This is your cushion. When markets fall, it is what you live on, so that you are never forced to sell growth assets at a low.
4. Set up a monthly withdrawal from a debt or hybrid fund for any gap between the floor and spending. A systematic withdrawal plan can be set for a fixed date each month, like a salary.

Month 3–4: insurance and health

• Health insurance is the first priority. If you were covered by an employer group policy, it usually ends with employment. Buy an individual or family floater before you need it; waiting periods for pre-existing conditions start from the date the policy begins. Under the old tax regime, premiums for a senior citizen qualify for a deduction of up to ₹50,000.
• Review life cover. If no one depends on your income any more, a large term policy may no longer be needed. If a spouse depends on your pension, check what happens to it after your death.
• Keep a medical fund separate from the cushion: even good insurance leaves co-payments and exclusions.

Month 4–6: tax and paperwork

• Choose the tax regime for the year deliberately. The new regime is the default, and its rebate makes taxable income up to ₹12 lakh tax-free, but the rebate does not apply to capital gains taxed at special rates. Retirees with large deductions sometimes still do better in the old one. Our guide to choosing a tax regime walks through it.
• Manage TDS on interest. Banks and post offices deduct TDS once a senior citizen's interest from them crosses ₹1 lakh in a year. If your total tax is nil, you can submit a self-declaration to stop it, rather than waiting for a refund.
• Pay advance tax if needed. Without an employer deducting TDS from salary, you may owe advance tax. Resident senior citizens without business income are exempt from it, which is worth confirming for your own case.
• Consolidate. Close dormant bank accounts, merge scattered mutual fund folios, and download a consolidated account statement so you can see everything in one place.
• Update nominations on every bank account, deposit, demat account and folio, and write or update a will.

Month 6–12: invest the long-term money, slowly

What remains after the floor and the cushion is money you will not need for seven years or more. That money still needs growth: a 60-year-old today can plausibly need income for 25 to 30 years, and the floor's payouts do not rise with inflation.

• Decide the share in equity or hybrid funds based on how much of your spending the floor already covers. The more the floor covers, the more volatility the long-term bucket can tolerate.
• Move it in gradually rather than in one go, for example with a systematic transfer plan from a liquid fund over 6 to 12 months.
• Once a year, refill the cushion from the long-term bucket, preferably after a good year rather than a bad one.

The year-one checklist, in one table

One rule above the rest

Nothing about retirement money needs to be decided in the first month. Parking the lump sum somewhere safe and boring buys time, and time is what makes every later decision better.

This post is educational and not investment advice. Past returns do not predict future returns; tax rules and small-savings rates change, so confirm current figures before acting.