Importance of Retirement Planning & Retirement Options in India
It is important to plan your pension or income after retirement. Today we are young India and by the year 2050 these young will become senior citizens. Just buying policies or investment instruments don’t ensure your retirement with dignity. Some key factors that act as catalyst for Retirement Planning in India.
A) Less working years than non working years
B) Increasing Life Style
C) Increasing Living Cost
D) Nuclear family culture
E) Advanced Medical Facilities
F) Increasing Medical Cost
G) Absence of Social Security System
Life Cycle of Individual
There are two phases of Retirement Planning. There are different options for retirement before or after Retirement.
1. Accumulation Phase of Retirement:
To plan for your retirement you save some amount every month to build your retirement corpus. This corpus makes you confident to retire if it is sufficient enough to take care of your necessities.
2. Distribution Phase of Retirement:
In these years to live your passion, you use this retirement corpus to generate regular cash flow. You get regular monthly or annual expenses in advance for your needs from investment of these assets.
Expenses after Retirement
A) Living cost
B) Domestic Help
C) House and Appliance maintenance
D) Monthly medical cost
E) Medical Emergencies
F) Gifts to grand kids
H) Maintaining Life Style
Some important factors while planning retirement
A) Don’t plan retirement in isolation.
B) Start planning your retirement as early as you realize.
C) Get a comprehensive Retirement Plan with your existing assets and the new contribution to be made.
D) Keep it simple
E) Don’t stop or postpone your investments.
F) After retirement look for returns after Tax and Inflation adjustment
Plans before retirement-Accumulation Phase
1. Pension Plans in India by Insurers.
2. Pension Plans in India by Mutual Funds.
3. Public Provident Fund.
4. Provident Fund.
Plans after retirement-Distribution Phase
1. Immediate Pension Plans by Insurers.
2. Monthly Income Plans by Mutual Funds.
3. Senior Citizen’s Savings Scheme by Post Office / Designated Banks.
4. Monthly Income Scheme by Post Office.
5. Fixed Deposits / Bonds.
6. Rental Income.