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Are you wondering what is retirement plan and why do you need to have one at a young age? If you are asking yourself this question right now, then you have come to the right place for answers.
Retirement planning is a multi-step process that allows you to build a corpus of funds to achieve your financial goals post-retirement. When you want to develop a pension plan, you need to first assess your income, expenses, determine a saving strategy, and look for ways to manage risk. Simply put, the best retirement plans need to devise strategies that inculcate a saving habit in order to invest and distribute your funds that will sustain during your retirement period.
In this article, we will share some tips to help you choose the best retirement plans to live out your golden years with dignity.
A robust retirement planning will involve complete evaluation of your income, assets, overall financial liabilities, and your life expectancy. It is a lifelong process that you should ideally start as soon as you get your first pay check. It is always better to plan ahead and increase your contribution towards a pension plan as your income grows.
Here are some benefits of investing in the best retirement plans.
A retirement plan will not only reduce your stress about the future but also help you manage your finances better to pay for financial emergencies. With a solid pension plan in your investment portfolio, you can spend your retirement years in peace.
When you invest in the best retirement plans, it ensures that you have built a corpus of funds that will support you and your standard of living even when you no longer have a steady income. It also gives you a stable source of monthly income to help you pay for your day-to-day expenses.
Never rely on your savings alone to pay for your retirement. What if you outlive your funds? That is why you need a solid retirement plan to secure all your liquid and other assets.
A retirement plan can help you transition from a working to non-working mode with ease. Your income will be immediately replaced by your pension plan, allowing you to remain financially independent even in absence of a regular income.
You can also benefit from tax saving throughout the period you remain invested. The best retirement plans will minimize your tax liability and helps you save money in the long run.
If you start investing at a young age, you can benefit from lower premiums. You are also able to take more risks, allowing you to invest in high-risk, high-reward fund profiles, thereby giving yourself better opportunity to save your money and grow your wealth.
Since retirement plans are long-term, you can avail loan to pay for an emergency financial requirement without taking out your savings.
The best retirement plans work like life insurance that give you death benefit in case something happens to you during the policy term. You can also expand the coverage of your policy by supplementing it with rider options, such as critical illness, permanent disability, etc.
Pension plan allows you to invest a lumpsum amount and enjoy immediate annuity or choose a deferred plan that enables you to accumulate more wealth by power of compounding until you start receiving payments. These plans also have high vesting age of 40 to 70 years.
A retirement plan is a preferred investment tool for many people. Here are some of its salient features that explain why.
Certain pension plans offer guaranteed bonus that is added to the sum assured at the end of the financial years. It becomes payable at the vesting age or upon death, whichever comes first.
The best retirement plans offer you a steady income in exchange for your consistent investment throughout the policy term. You have the option to choose a monthly income plan for a certain period or whole life protection after retirement.
In order to enjoy the benefits of the best retirement plans, you need to be eligible to buy one. You should be at least 30 years of age to start investing and maximum 60, after which you cannot invest in a retirement plan. Additionally, you must invest a minimum of Rs. 2 lakhs to start the investment for at least 10-30 years.
Once you meet the basic eligibility criteria, you must start saving for your retirement plan as soon as possible.
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