Retirement Planning can be described as the process to plan the long-term and short-term financial goals and the ways to accomplish these goals. Retirement Planning involves identifying different income sources, analyzing the financial objectives, estimating the future expenses, opting for savings program and managing risk and assets.
Planning for retirement is rather a life-long process. Even though, one can start their retirement at any age but it works best, when an individual includes this factor into their financial planning from the starting. Planning for retirement from an early stage of life is the best way to ensure a secured, safe and fun retirement.
Let’s take a look at the key take away of retirement planning.
Retirement planning can be described as the financial planning of investment, savings and final distribution of money in order to sustain one’s self at the time of retirement.
There are various popular investment options, which allow the individuals to accumulate fund with the advantage of tax benefit.
While planning for retirement it is important to consider factors like future liabilities, expenses and life expectancy along with asset and income.
The early one starts planning for retirement the better fund they can accumulate over a long period of time in order to have a secured life after retirement.
Pension plans are investment plans that lets you allocate a part of your savings to accumulate over a period of time and provide you with steady income after retirement. Retirement & Pension Plans provide you with financial security so that when your professional income starts to ebb, you can still live with pride without compromising on your living standards. Given the high cost of living and rising inflation, Retirement planning has become all the more important.
Retirement & Pension Plans provide ample regular income in retirement with the help of money saved during work life. Your family can maintain its lifestyle without your regular pay cheque despite constantly rising living costs.
Adequate retirement planning also help you to meet unexpected expenses without a worry.
Investments with regular premiums, sums up and makes your money grow well during your work life.
On retirement, a part or the whole of this savings can be used to create regular retirement income.
It is important to note that planning for retirement starts way before an individual gets retired—the sooner the better. Even though, the amount of money one requires to retire comfortably is entirely personalized, but there are various rules of thumb that can provide an idea of how much to save.
Here we have taken an example in order to help you understand how much retirement corpus one needs at the time of retirement.
Mr. Manish is 42 years old married man and is currently working in a private company in a position of senior product manager. His wife is only member of the family who is dependent on him. Mr. kumar wants to retire at the age of 60.
He currently earns Rs.80,000 per month, while his monthly expense is Rs.52,000 including the insurance premium and mutual fund investments. He is adequately insured and has created an emergency fund of 6 months. Considering the above mentioned information, let’s take a look at how much retirement corpus he needs during retirement.
Current Monthly House Hold Expenses Rs.32,000
Post Retirement Monthly Current Expenses Rs.32,000
Number of years left for retirement 18 years
Life Expectancy 87
Estimated Post Retirement Expenses Rs.69,085
Retirement Corpus Required Rs.2,11,94,287
In order to maintain the same life-style after retirement, Mr.Kumar will require approximately Rs.2.12 crore in order to live a secured life after retirement.
If you are trying to find the best pension plan in India, You have landed on right place. It is very important to understand the advantages of retirement planning and the benefits offered by various pension schemes in India. Cause they don't actually provide full potential of returns against investments.
1. Savings for a Longer Term
Irrespective of the premium payment mode selected by you, which can be multiple small payouts or a lump sum payment, one thing that you assure with a retirement plan is savings for the long term. Pension scheme India mainly focuses on creating the annuity that can further invest in generating a steady flow of cash for your post-retirement years.
2. Regular Income after Retirement
The pension scheme in India offers a guaranteed income that helps the policyholder to meet their day-to-day expenses. Your current income and future inflation should lay a foundation of your retirement planning as it will help you to compute the money you’ll need post-retirement. Since these life-income plans offer better returns, it is a smart way to walk down the lane of retirement planning.
3. No-Risk in Investment
The pension schemes in India protect the policyholder against any kind of investment risks. If this Pension Plan is offered by your employer, then also you need not worry. This is because, even if you had many downfalls in your regular finance management, there will not be any negative effect on your retirement benefit. Moreover, even if your company goes bankrupt, nothing happens to your pension even then. This is because, (comapny name) takes care of your pension payouts.
4. Tax Benefits of Pension Plans
The investment you make in the Retirement Planning solutions will help you to save significantly on your tax. In fact, if you plan it well, enjoy the offered tax benefits. Checking the policy details will also allow you to understand if you can avail tax benefits under Section 80C of the Income Tax Act.
5. Money When You Need It
Some plans offer lump-sum payment that you can use to meet major expenses (if any). In the years leading up to retirement, an individual may need funds for various reasons such as buying a flat or paying for children’s wedding. Our pension plans offer to withdraw a large chunk of your investment to meet financial emergencies only after 5 years premium period completion.
The early on you start planning for your retirement, the more wealth you can create over a long period of time in order to create a secured future after retirement Let’s take a look at the reason why you should start retirement planning today.
With the help of the retirement plan in India, you will be able to take care of the financial needs of the family after retirement as it will provide you with a source of income post-retirement.
The money saved for retirement can help you deal with any type of emergency situation, be it wealth wise or health-wise, in the future.
One of the most important advantages of retirement planning is that you can live a stress-free retirement life after retirement as you will not have to be dependent on anyone.
With proper retirement planning and by investing in the right pension plan, you can maintain a good lifestyle after retirement and can even fulfil your unfulfilled desires that you couldn’t early on in your life.
With the help of pension funds in India, you can assure a guaranteed income after retirement as an annuity to take care of your monthly expenses.
FD's are simple to understand and that is why they are popular in India. However, they suffer both in terms of growth and impact of tax. Remember, being low risk, its interest income is always being nibbled by inflation.
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