Retirement Planning is all about ensuring that after retirement, one can take care of his/her expenses through a regular stream of money. Hence we need to have a proper plan about how we are going to deal with savings and expenses post our retirement.
Here are four simple steps that can help you arrive at an ideal retirement plan.
Step 1 – You need to calculate how much money you require to lead a comfortable life in your post- retirement year Account for aspects like increased medical/health costs.
Step 2 – Have a very clear idea of any amount to be received in a lump sum at the time of retirement like EPF money.
Step 3- Choose the right retirement plan that enables you to meet your post-retirement expenses. Combine all the available options so that you have a diversified basket, cutting down reliance on one or two options.
Step 4- Start investing early in the retirement so that you have time on your side. It will allow you to enjoy the power of compounding.
Retirement planning is the process of meeting your financial goals post retirement. This can happen – 50% through the proper management of your finances and 50% through execution of your plans. Make advance provision for your anticipated financial needs that will arise in the future. The entire game is having the right amount of money at the right point in time in the future.
Retirement Plan Options
Let us discuss some of the useful retirement corpus building options. Each of these can be used to create a retirement corpus that can fund your post-retirement life. Ideally, one should use a combination of them.
- National Pension System – The NPS is a voluntary, defined contribution retirement savings scheme regulated by PFRDA. It is designed to enable the subscribers to make optimum decisions regarding their future through systematic savings during their working life. For more information one can visit https://www.npstrust.org.in/
- Public Provident Fund – This is a popular long term investment option which offers safety with attractive interest rate and returns that are fully exempted from Tax. Investors can invest minimum ` 500 to maximum`1,50,000 in one financial year. For more information one can visit https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx
- Senior Citizen Savings Scheme (SCSS) – A government scheme which is an apt choice of investment for those over 60 years of age. SCSS is available through many banks and post offices across India.. An individual can invest a maximum amount of ` 15 lakh, individually or jointly in an SCSS account. For more information one can visit https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx
- Pradhan Mantri Vaya Vandana Yojana – The aim of the scheme is to give senior citizens a form of regular pension. The scheme can be purchased from LIC in offline as well as in online mode. The scheme can be purchased by paying lump sum amount ranging from ` 1.5 lakh to maximum ` 15 lakh for monthly pension. For more information one can visit https://licindia.in/Products/Pension-Plans/Pradhan-Mantri-Vaya-Vandana-Yojana1
- Reverse Mortgage – Reverse mortgage is a relatively new way of financing against real estate. A reverse mortgage enables a senior citizen to receive a regular stream of income from a lender (bank or a financial institution) against the mortgage of his/her home. The borrower (i.e. the individual pledging the property) continues to own the property and is allowed to reside in the property, till the end of his/her life and receives a periodic payment on it. Upon the death, the house goes to the lender. While calculating the reverse mortgage amount, the lender factors in your age, the value of your property, current interest rates and the specific plan chosen. For more information , one can visit https://nhb.org.in/RML/guidelines.php
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