Nothing on this page changes your FIRE number. It is here because all of it is much easier to do in the six months before you resign than in the six months after, and because I had not thought about any of it until somebody asked me where an SWP actually credits.
Four things.
1. Your money moves only through accounts you registered in advance
This is the one that actually strands people. The other three are admin.
A mutual fund redemption credits to one place only, the bank account registered in that folio. There is no field on the redemption screen asking where you would like it sent. Your broker enforces the same rule from the other side, so money arriving from an account that is not linked to the trading account gets held or returned. That one exists to keep third-party funds out of a demat account, and they are strict about it.
Invisible for twenty years, this. The registered account is your salary account, everything works, you never open the screen. Then you resign, close the salary account or let it drift into dormancy, and the registered account across nine folios at Parag Parikh and Nippon and HDFC, plus your Zerodha login, is an account that no longer works. CAMS and KFintech between them cover most fund houses, which takes some of the pain out. Not all of it.
The order to do it in
Register the new account with every AMC and with your broker. Redeem something small and watch it land. Push a small amount into the broker and check that clears too. Then close the old account.
Do it the other way round and you can be locked out of your own corpus for a fortnight. Usually in month one of retirement.
Consolidate while you are in there. Most of us collect an account per employer without deciding to. Four banks by the time you are forty, each with its own minimum balance, at least one of them dormant long enough that they will want fresh KYC before letting you touch anything. Two is plenty. One that receives and one you actually spend from.
SWP calculator
Will your corpus last through retirement?
Model your monthly SWP against inflation and market returns. See when - and if - it runs out.
2. The salary account stops being a salary account
Your salary account is a product with a condition attached, and the condition is the salary. It carries zero minimum balance because your employer credits it every month. Stop the credits and most banks reclassify it to an ordinary savings account after two or three empty months, at which point a minimum average balance applies. The penalty for breaching it is small and monthly and easy to not notice for a year.
Whatever was bundled in goes with it, including in some cases a personal accident cover nobody remembers having.
Fixing it is one conversation with the bank, ideally before your last working day. Ask what the balance requirement will be, and whether holding an FD with them waives it. Usually it does. The only reason to have that conversation while you are still employed is that you are still a salaried customer when you do.
3. TDS carries on as though you still earn
Banks deduct 10% TDS on FD interest above ₹50,000 a year for senior citizens, ₹40,000 for the rest of us. That deduction assumes taxable income. In your first full year without a salary there may not be much, and the bank has no way of knowing.
Form 15G if you are under 60, Form 15H if you are over. It declares that your income for the year falls below the taxable limit and asks them not to deduct. Start of the financial year, each bank separately, again every year. Miss it and you get the money back as a refund eventually. It just sits with the government for a year first.
The wider tax picture, capital gains and advance tax and which instrument to draw down first, is in the withdrawal sequencing article.
4. A nominee cannot pay your hospital bill
Nominations and wills are covered in the pre-retirement checklist, and you should do all of that. This is a different point and the two get run together constantly.
A nominee is a receiver, and only after death. So if you are alive and unconscious in an ICU, your nominee has no authority over a rupee of yours. Your husband cannot pay the hospital out of your account because his name is on a nomination form. Most people assume otherwise.
What works is joint holding with either or survivor operation. Either of you can transact alone, and on the death of one the other carries on without a succession process. Put it on the account you spend from and on whichever one your SWP credits into. It is one form at the branch.
Two smaller things while you are at it. Keep three or four months of expenses in a plain savings account your spouse knows the login for. And write down which bank and which AMC hold what. The list, not the passwords. Otherwise somebody ends up reconstructing it from your inbox at a bad time.
TL;DR
- Register the new bank account with every AMC and your broker, test it with a small redemption, and only then close the old one.
- Convert the salary account before your last working day.
- Two bank accounts is plenty.
- Form 15G or 15H, every April, every bank, forever.
- Either or survivor on the accounts that matter. A nomination does not give anybody access while you are alive.
One caveat and it is a fair one. None of this is difficult, and you could sort the lot out after retiring with some irritation and a few wasted weeks. It is here because doing it early takes about two hours, and I would rather spend two hours than find out which of the four I got wrong in the same month I stopped earning.