Retirement plans are important because of the following reasons
- There would be no steady flow of income after retirement. It would affect the usual lifestyle one would be leading before retirement.
- There could be heavy expenses as compared to the less income.
- Savings would be less.
- Health and hospitalization expenses would cause strain on the savings as there would be no more health benefits/coverage for self and family provided by the employer if any.
- The social security benefits of pension or health care facilities would be less.
- Financial cause and worry could lead you to stress and depression problems.
Planning for retirement needs financial introspection. You have to work on the various expenses that you are likely to incur after retirement. Many investment companies provide the tool of retirement planning calculator, oryou can work out your monthly running expenses, liabilities and arrive at a monthly figure and invest accordingly. Various options to strengthen your retirement income are as follows:
- Conventional Ways of investment
- Fixed deposits
- National savings certificates, National pension scheme, Public provident fund, etc.,
- Financial products such as shares, debentures, bonds, unit-linked insurance plans, guaranteed income plans. mutual funds, equity funds
- Investing in gold
- Real estate investment, such as land and house.
- Attractive investment options strengthening your retirement incomes are as follows:
- Guaranteed Income plan
You can opt for guaranteed income plansby studying them and investing in the right type of plan that suits your requirement. Such plans are specially designed to offer life insurance with maturity benefits and guaranteed payouts. It offers financial security and one can receive the income yearly, half-yearly, quarterly, or monthly according to the requirement.
- National savings certificate
This plan offers an interest rate of 7 to 8% PA but may vary according to the number of years; we lock in the amount. The lock-in period is 5 years. Some plans also offer a lock-in period of 8 years.
- Mutual fund plans and ULIP plans
Mutual fund plans provide a good rate of interest from 15% to 18% pa. Here the lock-in period is 3 years. Mutual funds are subject to market risks.
If you are planning for ULIP funds, which is also an attractive investment option, then prefer the balanced fund’s options rather than the equity and debt funds as your returns will be guaranteed with less risk. This plan also provides the necessary health cover after retirement.
National Pension Scheme earns you a good interest rate of 12% to 14% PA, but the lock-in period is till retirement. This is also a safe way of investment. This is a good plan since, the private sector doesn’t have any pension option facility after retirement. You also get tax benefits for this investment.
Choose from these best investment options according to your financial goals and risk appetite and secure your golden years after retirement.