You work hard for years to meet the ongoing needs of yours and your financial dependents. In very rare cases, your regular income during your working years is enough to save up sufficient money for your post-retirement phase. This is where retirement planning comes in. It allows you to invest a part of your money during your working years to build a significant corpus. This corpus will turn into your financial support after your retirement when you will have no primary source of income. So, it’s important to start saving for your golden years by choosing the best pension plan in India.
But what benefits should you seek from a retirement plan? Here’s a look.
Regular Income after Retirement
If you receive the sum assured from your retirement plan in the form of regular income, it can help finance various needs. These include living needs, medical expenses and goals like trips you wish to pursue.
Besides, the corpus can also help financially secure you in an emergency. This can be a medical exigency or an urgent need for home renovation or shifting. You will have the safety blanket of the sum assured to fall back on.
Protection Against Inflation
You can expect inflation or the rising cost of goods and services to keep going up with time. The necessities that you buy now can cost several times more, say, in the next 15 years. So, you need to save enough for the long term when prices will have increased manifold. A retirement calculator comes in handy in this case.
The annual rate of inflation in India as of April 2023 is 4.7%. After researching the average rate of inflation in the coming years (after which you expect to retire), insert the value in the calculator. Thus, you can factor in inflation to calculate how much you should save now to smoothly finance your post-retirement years.
Tax Benefits
This is another major benefit to avail from a pension plan. How much would be exempt from your taxable income and what kind of tax benefits you will get depends on the chosen retirement plan.
For instance, a deferred annuity plan allows your income to grow exempt from tax during the accumulation phase. This is the phase during which you need to make regular premium payments. With this tax benefit, you don’t need to pay taxes on the funds that accumulate during the years of your premium payments.
It’s vital to choose the best pension plan in India based on your needs. They will guide you to look for any specific benefits. For instance, if you don’t want to keep paying premiums, you can look for a one-time payment option or a limited premium payment term. If you want to financially secure the future of your spouse, you can look for a joint life option in a suitable pension plan. Among other benefits, you can consider the availability of a loan against the plan after a certain period is over. Any benefit you seek, ensure to choose an esteemed insurance provider in India.
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