Why These Best Retirement Plans Are Worth the Money?
One of the common financial goals most people have is financial stability after retirement. Once you retire, you may not have a regular income stream, but you may still have several expenses to take care of, like utility bills, medical care, etc. So, you manage your expenses and be financially independent. Well, the simple answer is – retirement plan.
A well-planned retirement investment helps you get regular income during the golden years of life and enjoy your life to the fullest. There are many retirement plans in India, and in this write-up, we discuss the best options that can help you accomplish your retirement goals. But, first let us understand why retirement planning is critical.
In India, the typical retirement age is 60, which means you still have 20-30 years of life ahead of you, thanks to the advances in medical technology. At the same time, the living cost has increased significantly. After you retire, you may not get a regular income, and you have to invariably rely on your savings to take care of regular expenses.
With this approach there is a risk of facing a financial crunch. But with proper retirement planning and investment you can generate regular income for yourself.
Understand your current lifestyle, the predict your future expenses and calculate the corpus you need to save to sustain the predicted expenses. Once you know how much fund you need to build, calculate how much you need to save monthly to achieve a successful retirement fund as planned.
You can use retirement calculators to do all this overwhelming money calculations and help you generate the amount you need to accumulate every month and invest.
Best investment options for a secure retirement
As you grow old, you become more susceptible to various illnesses, and you may need frequent hospitalisation. Like other costs, medical expenses are also likely to increase in the future. Not to mention, due to changing lifestyle, critical illnesses are also on the rise. So, it is paramount that you invest in a comprehensive health insurance policy.
It will help you take care of the healthcare expenses during your old age. You can get the best treatment without worrying about the cost involved or depleting your savings. Many insurance companies offer a variety of health insurance plans, do your research well, and choose the one that suits your medical needs and budget.
Unit Linked Insurance Plan or ULIP Plan is essentially a type of life insurance policy. It provides dual benefits of insurance protection and wealth building, which makes it a viable retirement investment option. ULIPs are essentially a long-term investment instrument, and come with a lock-in period of five years.
Compared to traditional investment options like bank savings accounts and FDs (fixed deposits), ULIP offers market-linked returns, which are high in the range of 10-12%. Thus, it helps you beat the inflation rate. Additionally, ULIP policy gives you the flexibility to invest in different asset classes of your choice as per your long-term goals and risk-taking ability. Thus, ULIPs let you build a sizeable corpus to see through your retirement years.
The National Pension Scheme is a popular retirement investment option offered by the Government of India. Through NPS, you can regularly invest a small amount in your pension fund account throughout your working years. The money you contribute is invested in the money market instruments of your choice, allowing you to grow the investment over the years with compounding effect.
After you retire, you can withdraw up to 40% of the accumulated funds in lump sum, and use the balance amount to receive regular pension throughout your life.
Retirement planning is a critical step towards achieving financial security. It requires choosing your investment carefully so that the returns you get can help you get regular income.
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