How Pension Plans Can Secure Your Retirement Years

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How Pension Plans Can Secure Your Retirement Years
How Pension Plans Can Secure Your Retirement Years

How Pension Plans Can Secure Your Retirement Years : Getting old is an unstoppable phase of every individual’s life, and there is no stopping it. However, what is up to you is planning your retirement right so that you get to enjoy your retired life and live stress-free by being financially independent.

Rising nuclear families and children migrating to other countries for better career opportunities often leaves the parents alone in the later stages of their lives. A pension plan is exactly what is needed in this scenario, for them to be independent when it comes to their finances so that they do not have to depend on their children for their every need.

The best pension plan will be designed to meet your post-retirement needs without having to rely on others for financial support of any kind. Right from your small day-to-day bills to the big medical bills, you can pretty much take care of it all provided you have started a pension plan and saved towards the same from a very early itself.

What Is Retirement Planning All About?

For those who have been working 8 to 10-hour shifts every day for six days a week, for the past 20-25 years of their life, the word retirement comes as a big relief as they can finally hang their coats and enjoy the next few years in peace. However, if you have not started saving towards your retirement while you were still earning, then it will be difficult for you after a certain point. Therefore, more and more investment advisors stress the importance of planning out your retirement plan in advance and start investing in it at the earliest.

A proper pension plan is divided into three broad phases – investment, accumulation, and the withdrawal phase. The investment period is usually when you are in your 30s, right up to your early 50s. However, it would help if you remembered that the longer your money is accumulating, the more it can grow and earn better returns in the market.

Start by making retirement goals and follow a simple thumb rule of replenishing 70 to 90 per cent of your pre-retirement income towards a pension plan, to lead a stress-free and financially secured life post-retirement. By investing in a pension plan, you will be able to sustain your standard of living even after you have retired.

Reasons Why One Should Invest In A Pension Plan

The best pension plan will not only be able to take care of your post-retirement financial needs but also help you be secure in the later years of life. Be it medical bills, rising living expenditure or other such expenses, a pension plan would be your answer to it all.

Here is everything the best pension plan can offer you:

  1. Disciplined approach towards saving your money
  2. Financial independence at the later stages of life
  3. Aid to cover your bills and medical expenses
  4. A better alternative to simply saving in a bank’s savings account
  5. Be prepared for life uncertainties

Considering the high rate of inflation in India, a retirement plan or a pension plan could replace your previous source of income and ensure that you never have to worry about your finances again.

Another key factor in planning your retirement phase is to remember the important role that life insurance plays in your retirement. There are many who still look up what is life insurance on the internet, and amidst the second wave of this worldwide pandemic, it would be very wise to purchase life insurance along with a pension plan because securing your family’s future is of the essence here.

Ideally, a term life insurance plan with return of premium benefit could be perfect for you as you get survival benefits in that insurance plan as well, which can add to your retirement corpus.

You can always start saving and investing at an early age, but the risk of unfortunate and untimely death always exists. A life insurance policy will not only offer you security but also take care of your family and their financial commitments, even in your absence.

Start Planning Your Retirement At The Earliest

Like in the case of most financial planning, you need to start thinking about your retirement corpus and picking out a pension plan to begin investing while you are still working.

You can easily claim a tax deduction on the contributions you make towards your pension plan under section 80CCC as per the Income Tax Act of 1961. These contributions are tax-exempt to a maximum of Rs. 1,50,000, and the rest of the amount can be distributed as an annuity, which will be subject to taxation at the time of your retirement.

Understanding the importance of retirement planning and saving towards your pension plan is very vital, right from the time you start earning. If you want to maintain your standard of living post-retirement and be financially independent while you are at it, then saving a large chunk of your current salary is the key.

 

 

 

 

How Pension Plans Can Secure Your Retirement Years

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