Retirement plans

Today we all know the fact that to reach somewhere, we need to keep moving. But, had anyone thought what if when you are exhausted to take a step anymore? No, we are not talking about any adventurous trip, instead its life roller coaster that we are talking about. It’s hard to deny the fact that life is damn unpredictable and since we cannot take control of the uncertain events. However, we can definitely follow some strategic plannings to face the situation.

And, undoubtedly, retirement plan is one such great protection plan to secure life post retirement. Retirement is like a long vacation, you have all the time to travel the world and follow the hobbies, but is it really possible without having enough money in bank accounts? Definitely not.

Thus, strategic retirement planning assures stable income even after you bid a goodbye to your profession or job. This is why it is suggested to invest in best retirement plans at a young age, which can let you enjoy a long vacation phase of life.

Amidst the hassle of work and responsibilities, most of us miss out following our hobbies that would bring us joy. Therefore, retirement is said to be an ideal phase to enjoy all the left out hobbies or activities that you wished to experience at least once in a life.

What is pension plan?

A retirement or pension plan is a policy which guarantees regular income post retirement against the premiums paid during the earning phase of life. Giving a portion of income to a pension plan secures life financially post retirement. By having such a plan, one doesn’t need to get depend on others to meet regular expenses like healthcare or lifestyle needs.

Now, if you think that you can save without following a pension plan, then it is really hard to do so because no matter how much one tries to save some pennies for future days, with rising inflation rate and cost of living, it’s really challenging to make the goal fulfil. Thus, it is essential to get a dedicated policy plan to maintain a different saving fund for future independency.

Benefits of retirement plans:

Retirement is a phase that we all have to go through at some point in time. Also, in the present century where social and financial security is a must, having a pension plans have become even more important. Following a strategic financial planning is crucial that will ensure a secure, independent, and stress free retirement phase. So, let’s check out the key benefits of having a pension plan.

Peace of mind – This is one of the key benefits of retirement planning. As mentioned earlier, retirement is like a long vacation and to enjoy the vacations to the fullest, it is important to have enough savings in the bank account. And as a matter of fact, while rushing to fulfil the needs of parents, spouse, and children, it’s hard to save funds without following a strict plan. The lack of planning can leave in spiral of uncertainty during retirement phase that can trigger unnecessary stress. Thus, a strategic pension plan gives a peace of mind during a stiff phase of life.

Independency – Number of registrations at old age homes have increased over the years and that’s because they have been dependent on their children or guardians. But, if you have a pension plan, you don’t have to get dependent on anyone and enjoy the phase of life with full independency.

Tax benefits – Another amazing factor that adds to the list is the tax benefits. Many people are not aware that pension plans are eligible for several tax benefits including deduction in income taxes during retirement. Tax planning is a major part of a retirement policy, so be sure to clearly discuss it with the insurance company or retirement advisor.

Plan your retirement judiciously with five golden rules in mind:

Being a responsible youth and breadwinner of a family, it is important to understand the significance of retirement policy and its consequences in long run. However, being clear enough about the plan is very important that will aid you achieving post retirement goals. Certain factors need to be taken into consideration while choosing the best retirement policy in India. So, here are some golden rules to follow while choosing the right pension plan.

Follow 90:10 ratio – The first rule is the easiest to follow. If you have a regular income, then give at least 10% of your income to a pension plan. This is a good way to build a nest egg for future. The best thing about following this rule is that you don’t feel financial burden of paying regular premiums.

Don’t withdraw money from retirement corpus – One common mistake that we all make is withdrawing money from saving schemes. Dipping into the retirement savings before maturity term can severely affect the compounding rate of the savings. Try to understand the power of compounding and avoid any action interrupting the flow of money in the retirement corpus.

Start early – Experts suggest that signing in to a pension plan at an early age offers the extended maturity benefits. Investors have reasonably enough time to raise the savings fund without feeling much of financial burden. Also, the availability of plans at a young age gives opportunity to choose the right plan from an array of retirement policy options.

Save for retirement, borrow for others – It is a common attitude of Indian parents that they are ready to sacrifice their needs by putting their children’s need on top. However, before making the common mistake again, remember that such needs can be fulfilled via loan. Education loan or personal loan is easily available, but there is hardly any bank offering loan for surviving life after retirement.