Retirement planning is a major financial responsibility that you should embrace early on in your professional life. After all, you will naturally want to be financially safe when you retire. You should never neglect this aspect since you will naturally want to live out your golden years in the highest possible financial comfort. Here is a closer look at the process through which you can choose the best retirement plan in India.
Choosing the Best Retirement Plan in India
Here are a few pointers on how you should go about the process.
- When are you retiring- Consider the timeline for your retirement. It will help in deciding strategic investments accordingly.
- Using retirement calculators- Taking the time left till you retire into account, calculate the estimated corpus that you can amass based on your financial circumstances (how much you can afford to invest) and an average rate of return.
- Work out the retirement corpus you need in the first place- Determine how much you will require at the time of retirement. Calculate your personal needs after retirement, including medical costs, travel, and other necessities. You should also consider average life expectancy and unforeseen long-term care needs in your country.
- What is your risk quotient- You should invest only after you determine the risk appetite/tolerance that you have, based on your current financial position and other goals in life before retirement.
- Choose the investment options- You can take your pick from investment avenues depending on all these factors. There are dedicated retirement plans offered by insurance companies that you can consider. These come with the option to invest in varied instruments to build a corpus, while getting life insurance coverage simultaneously. At the time of retirement, the money is used to purchase an annuity that will give you monthly income for a fixed duration or your entire lifetime. There are several other retirement planning investments that you can also check out in this regard.
- Emergency funds are essential- Whenever you chalk out your retirement plan, make sure you have provisions to create an emergency fund. It should roughly cover 6-12 months of living expenses. This will help you tackle unpredictable and sudden expenses without dipping into your core retirement corpus.
- Do not forget inflation- When calculating how much you will need in the future, do not forget to work inflation into the mix. Everything will be costlier in the future and you should be prepared to meet these costs in advance.
It can thus be stated that the selection of the best retirement plan in India is hugely dependent on what you require after retirement. Paying attention to the rewards and risks involved is also essential. You should also choose plans only from trusted financial institutions and insurance companies that have good track records. This is a must to ensure higher safety of your investments. Take professional guidance if necessary and start as early as possible in order to benefit from the power of compounding. Here’s to a comfortable and worry-free retirement ahead.
