Retirement planning is not only important for your security but the comfortable sunset years. For all of us, retirement planning is the primary goal after our kids’ education and marriage goals. All of us wish to end a monotonous life and enjoy a comfortable retirement. There are different plans that are available a few of these can be started at an early age of 45 years of age and some of them at the age of 60 years.
So now it is up to you to decide on your retirement age. However, choosing the right retirement plan and planning on time are the two key factors for successful retirement planning. So let consider and discuss retirement plans in detail.
What are the current retirement products that are available to us?
Let’s classify them as below.
1. NPS- National Pension Scheme is backed by the Government. The best aspect of this pension plan is that the amount is locked until the time you plan to retire. The second noticeable advantage is that the charges are very low (0.0009% to 0.25%). However, there are a few disadvantages as well. Since the maximum cover of equity is limited to 50% only, it restricts the policy holder’s equity exposure which will have an impact on the returns also. The compulsion to buy the retirement product is unfair, there is no control over your portfolio, and the retirement benefit that you will receive will also be taxable income, unlike other retirement products.
2. Traditional Retirement Plans- These traditional plans are managed by LIC and are considered as traditional plans. These policies differ based on two variants immediate annuity plan and deferred annuity plans. However, one need to know that the returns on deferred annuity plans are so low that they do not take into consideration the inflation cost, as well.
3. ULIP Retirement Plans – Ulip plans usually look very attractive, but one needs to understand the cost and liquidity aspects once you attain retirement.
4. Mutual Funds Retirement Plans – These funds are managed by mutual funds and are very different from all the above-mentioned categories. However, under this retirement plan also one will have to verify aspects like liquidity, cost, fund performance, taxation, etc.
5. Creating on your own – The best and the most convenient resort is to create your retirement corpus by making a portfolio in which you can include all your assets, calculate the risk appetite and start saving and investing. This is nothing but a DIY kind of a solution. However, creating this kind of a corpus demands some homework from your end. The risk involved here is, you need to be a master investments so that you do not suffer losses.
Below listed are a few tips for buying a retirement plan
1. Earlier the better – It is always wise to start planning for your sunset years at an early age. So the question is – “How early?” Right from the day, you received your first cheque, act prudent and keep aside some amount for a rainy day.
2. Higher sum assured – Consider pension plans that offer higher assured amount along with assured benefits and accrued bonuses.
3. Assured death benefit – Opt for a plan with very less amount of death – for instance 100% of repayment of premiums.
4. Expenses – It is always wise to opt for policies wherein charges are competitive. The more you lose towards expenses, the less is your corpus towards retirement.
5. Financial planner – Retirement planning is indeed a serious business. It is so serious that one needs to keep aside a sum every month for a decent old age fund. It is wise to take help of a financial planner who can guide to in selecting the best retirement and pension plan.
