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nationniro · 3 years

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Retirement plans | Investment plans | best retirement | Insurance policy

what and why retirement planning

1)What is Pension? 2)Annuity Meaning & Definition 3)Benefits of Retirement Plan 4)4 Reasons why you Should get a Pension Plan! 5)Unit Linked Pension Plans - a smart choice for your retirement! 6)How Much Would You Need Post Retirement 7)Benefits of Early Retirement Planning 8)How to Choose the Right Pension Plan 9)Nearly 50 and still no retirement planning done ? Don’t’ worry, it’s not yet late! 10)Why you must consider inflation when planning retirement 11)Why you must consider inflation when planning retirement

1)What is Pension?

Retirement is a time when you can finally relax and fulfill the long-awaited dreams. But it can also be a challenging time if you are unprepared for it. Hence, it is in your best interest to understand what is pension and its importance at an early stage in life. Doing so will give you more time to start planning for your retirement. Options to Build Pension Fund 1. Deferred Annuity 2. Immediate Annuity 3. Annuity Certain 4. Pension Plan with Life Cover 5. Guaranteed Period Annuity 6. Life Annuity 7. National Pension Schemes (NPS) 8. Pension Funds How to Choose the Best Retirement and Pension Plan? Once you start earning, it is never too early to prepare for retirement. You can begin by reviewing the pension information for different schemes. It may give you a better idea of the requirements for life after retirement. Proper planning also provides time for your investments to grow and yield better results. Therefore, it is vital to recognize what is pension scheme and the options available to make an informed decision. It is also crucial to understand what is pension has different implications for each of us. Let's discuss the things you should remember when determining the best retirement plan per the pension information 1. Consider Your Expenses 2. Impact of Inflation 3. Debt Repayment 4. Policy Features

2)Annuity Meaning & Definition

An annuity is a contract between an individual and life insurer aiming at generating a regular income for life after retirement. For annuity, lump sum payment is made by the investor, which is then invested by the life insurance company to pay back the returns generated from it. At its core, an annuity is a contract with which you can plan to generate a steady income at a future time, such as during the retired times. In India, people purchase annuities to prepare for their retired lives. You should also know that most people consider it a form of insurance, not an investment avenue. Those who find it difficult to understand what is annuity can think of it as a plan under which they can receive regular payment for life in return for a lumpsum investment. Let us dig deeper into its various facets to describe what is annuity and how you can benefit from investing in it. Taxation on Annuity Annual income slabTax rate for people in the age bracket of 60 to 80 yearsTax rate for people of age greater than 80 yearsUp to Rs. 3,00,000NilNilBetween Rs. 3,00,000 to 5,00,0005% of the amount above Rs. 3 LakhsNilBetween Rs. 5,00,000 to 10,00,000Rs. 10,000 along with 20% of taxable income above Rs. 5,00,00020% of total taxable income above Rs. 10,00,000Above Rs. 10,00,000Rs. 1,10,000 along with 30% of taxable income above Rs. 10,00,000Rs. 1,00,000 along with 30% of total income above Rs. 10,00,000

3)Benefits of Retirement Plan

Many decisions we make have life-changing results – some in the near future and others in the distant. Yet due consideration is required, be it, investing in the future of your family, buying a home and/or car, and planning for retirement. Financial planning reflects the personality of an individual. Let’s see how 3 best friends had a different lifestyle after retirement based on the choices they made in the present day. AttributesHARISHSONAMSAURAVProfileAge: 28 | Team Leader at a bank’s data centre | Shining star at work | Single – dates activelyAge: 33 | Marketing Manager at a consumer goods company | Married | Mother of a 6-year oldAge: 35 | Vice-President Human Resources | Married | Father of a 2- and 4-year oldLifestyleGadget-freak | Rides a fancy bike | Collects premium watches | Fine dining, always | Stays in a rented apartment in an upmarket condominium | Membership in high-end fitnessOwns an envious collection of shoes and bags| Organises family vacations and weekend getaways | Contemporary home and kitchen décor |Frequent user of premium personal grooming servicesOwns an apartment | Travels abroad once a year |Occasional weekend getaways | Budgets spending on apparels, accessories and personal care | Drives a premium sedanAnnual Earning₹8—10 lakhs pa18—20 lakhs pa28—30 lakhs paMonthly Saving5—7% of the monthly incometax10—12% of the monthly income22—24% of the monthly incomeInvestment portfolio Life insurance and EPF Life insurance, EPF, SIP MF, FD, Gold,Life insurance (pension plan and ULIP included), EPF, MF, FD, National Pension SchemeLife goalsMaintain the present lifestyle | Purchase a premium SUV | Annual international luxury travel once a yearMaintain the present lifestyle | Corpus for child care, especially education | Coverage for highest quality medical care for familyMaintain the present lifestyle | Retirement planning | Adequate medical coverage for the health of self and family | Corpus for child care |Thoughts about retirement planningLive life king-size, after all, you only live once. Having worked only 5 years now, too early to consider and /or start retirement planningHaving accomplished other goals, started with retirement planning after working for 10 years now. Better later than never. Slow and steady win a raceThe early bird catches the worm – saved 20% from the first pay-check 12 years ago. Allocated 17% of the additional income from subsequent raises Fast forward to the future (2050)Now 51 | Compromised on the lifestyle and life goals to provide for the family (aged parents, home-maker wife, and adolescent children) | Retirement corpus 6 crore Given how life pans out in the future, it is clear that not only planning for retirement but also starting early makes it count. Thus, 'Now' is the time when you should start your retirement planning."While a bank loan can fund an expensive college course or a grand wedding; it cannot be availed to finance a life during retirement." Here’s how we could benefit from retirement planning. Why 'NOW' is the Time - Benefits of Retirement Planning With Pension and Retirement Plans, you may get some of the benefits mentioned below: Guaranteed Vesting Benefit: With Retirement plans, you will get a fixed or guaranteed income to help you with your retirement planning. Not only this, you might get an option to provide the income to your spouse in case of your untimely death Death Benefit: Pension plans also provide death benefit for financial security of your family in your absence. The nominee will get the sum assured or death benefit in case of your untimely demise. Flexible Premium Payment Terms: With retirement and pension plans, you also get the flexibility to choose the premium payment term. You can select your premium payment term depending upon your financial goals Customize your Retirement Plan: With additional riders, you can customize your retirement plans to help you and your family avail additional protection. Tax Benefits*: Pension plans and retirement plans qualify for tax deduction under Section 80CCC of the Income Tax Act, 1961. You can avail tax deduction up to Rs.1.5 lakh for the purchase of a new policy or payments made towards renewal of an existing policy providing a pension or periodical annuity. Under pension plans, some amount is paid at maturity which is exempt from tax and the rest amount is used for annuity purchase. Annuity earnings are added to the taxable income and taxed as per your income tax slab. Also, no TDS will be deducted on annuities

4)4 Reasons why you Should get a Pension Plan!

Inculcates a Savings Habit Gain from Compounding Offers a Flexible and Scalable Investment Plan along with Insurance Safeguards the Interests of your Loved Ones

5)Unit Linked Pension Plans - a smart choice for your retirement!

You can invest in a ULIP (Unit Linked Insurance Plan), a low-cost, long-term investment option to strengthen your retirement plans. It’s a pension scheme that combines both, insurance and investment. It’s a modern way to invest in market-linked pension products, which give high returns." "What is ULIP?" It is a type of insurance plan that combines investment and protection. 1. One portion of your premium is invested in stocks, bonds and other financial instruments so that your money grows based on the market’s performance. 2. The remaining amount is invested in life insurance that will provide financial protection to your family. Based on your risk ability and investment appetite, you can choose from several fund options such as: 1. High-risk funds - If you are willing to take a higher risk, invest in equity funds. 2. Balanced risks funds - On the other hand, you can invest in the balanced fund in which your premium is distributed between high-risk equity and fixed interest units. 3. Moderate risk funds - Here, your premium is invested in government securities, corporate bonds and various other investments that give you a fixed income. It comes with relatively moderate risk. 4. Low-risk funds - Your premium amount is invested in cash or bank deposits, which have a low-risk profile.

6)How Much Would You Need Post Retirement

They say “life is a meal and retirement is the dessert.” This is the time you are to toss aside all of your life’s mundane worries and responsibilities as you embrace your post-retirement heydays. Many people believe that life begins after retirement, deeming it as the golden age of life. Well, retirement does leave you with ample time to pursue your hobbies, engage in recreational activities, or realize that long-standing dream of traveling the world. However, knowing that you will not have your day job any longer, you are going to be deprived of your regular source of income. Sufficient funds are necessary to enjoy the post-retirement years in comfort and leisure. For that purpose, it is necessary to take prudent investment decisions during your working days. Retirement planning through investment in pension plans helps to maintain financial security once your regular income (through day job) starts to ebb. Life insurers such as MaxLife provide pension plans that offer the combined advantage of maturity as well as death benefits, thereby securing the financial future of your loved ones and your post-retirement. Choosing the right kind of pension plan to avail an uninterrupted source of income even after retirement can be exhausting. You are required to do extensive research for choosing the right scheme, zeroing down on the exact premium amount, planning the pay-out interval, and other investment-related information for getting an adequate pension to make ends meet even after retirement. Determine the Basic Living Expenses: Take Inflation into account Plan for Health Insurance Consider Recreation costs

7)Benefits of Early Retirement Planning

The early bird catches the worm. It stands true even in the case of retirement planning. Your early 20s are a good time to start investing, as you start earning money. However, for most of young people, retirement planning doesn’t seem to cross their minds. Here are some reasons why you should reconsider. The Impact of Compounding Case 1 – Started EarlyCase 2 – Started EarlyStarting Age2535Retirement Age6060Invested for35 years25 yearsMonthly Investment (Rs)10002350Total Amount Invested (Rs)420,000705,000Rate of Return (assumption)8%8%Fund Value at Retirement Age (Rs)21

8)How to Choose the Right Pension Plan

1. Does the plan allow you to save systematically for a long term and flexibility to choose your retirement or vesting age? 2. Does the plan offer some minimum guarantee of the principle that you invest? 3. Does the plan allow you to invest in equities and debt in a balanced manner? 4. As it is important to plan for retirement for you and your spouse, an ideal retirement plan should also offer you the option of purchasing additional life cover. 5. With an increase in income, you must ensure that the monthly savings you do towards your retirement should also increase every year in a systematic manner. Ideal retirement solutions should provide you the option of increasing your savings in a systematic manner.

9)Nearly 50 and still no retirement planning done ? Don’t’ worry, it’s not yet late!

Now, I knew I had to start planning for retirement. But how and where to start? Ashok simplified this for me, he said, “Just follow this 4 step process to plan your retirement in a smart way.” STEP 1 - Get, Set and Go! - Set goals and start working towards it At 50, you would have different goals that you may have to prioritize, such as expenditure on your children’s education, their wedding or medical expenses. Prioritize your goals and set timelines. With multiple goals, you must give priority in the order of importance and find out how long you have to achieve each goal. While retirement may be planned for many years ahead, make sure you factor it in early enough so that you can start working towards it. STEP 2 - Wrap it Up! - Start closing your loans and debts To maximize your investment towards your retirement goals, start to close your loans and debts. Ashok astutely said, “Ideally, you should be done with your EMIs by the time you hit 60 so that your liabilities are over, especially since you are starting late.” STEP 3 -Make it less harsh- Organise your financial products

10)Why you must consider inflation when planning retirement

nflation is an issue on everyone’s mind; not only does inflation increase your cost of living as it leads to a rise in prices of fuel, groceries, transportation, and bills, in general, but it also reduces the value of the Rupee. A plate of bread-omelet you relished during your college days would probably cost you more 4 years after graduating. Have you ever heard your parents reminisce about watching a film in the 1960s or 70s for a mere ₹ 2 in a theatre? Now, the same experience costs more than ₹100. Blame it on inflation!!! Read the full article

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