New Delhi, Aug. 21 -- A Rs.4.5 crore retirement corpus invested in a fixed deposit (FD) at a 7% interest rate earns about Rs.37.33 lakh in interest over a year. However, it also pushes income into the 30% tax slab, attracting around Rs.7 lakh in taxes under the new tax regime, leaving the retiree with roughly Rs.30.33 lakh a year.

But there is a way to get better post-tax returns that also increase each year to keep up with inflation - mutual funds.

According to an Economic Times (ET) report, investing the corpus in a mutual fund and setting up a systematic withdrawal plan (SWP) reduces the tax burden and creates a steady income.

Another plus of this approach is that you can withdraw both the principal and the gains, but you pay income...