Financial stability after retirement is a common financial goal. Well-planned retirement investments are crucial for financial freedom post-retirement.
Why should you plan your retirement?
Your retirement is likely to last longer than you expect. With advances in medicine, life expectancy for both men and women is bound to increase. Moreover, the cost of living will also increase with time due to inflation. With retirement, your primary source of income stops and you have to rely on your savings and investments. With proper retirement investments, you can easily avoid financial crunches.
Ideal investment plans for retirement
If you are looking for an ideal investment plan for your retirement, you can consider the below options: -
Pension Plans
Pension Plans act as a regular source of income during retirement by providing periodic payouts. You can withdraw a portion of the amount when you retire. The rest you receive as a pension to cover your expenses in the absence of your regular income.
National Pension Scheme (NPS)
NPS is a government-sponsored pension scheme. Through this scheme, you can regularly set aside a sum of money in a pension account during your working life. Your contribution is invested in the capital market instrument of your choice, allowing your investment to grow over the years. Once you retire, you can withdraw a part of the accumulated funds as a lump sum and receive the remaining amount in small instalments throughout your life.
Unit Linked Insurance Plans (ULIP)
Designed for the long term, ULIPs can be viable retirement investment options. ULIPs provide high returns which also help in beating the rate of inflation. You can also choose the funds you want to invest in as per your risk-taking ability. Thus, ULIPs let you build enough wealth to see you through your retirement years. Moreover, ULIPs also provide a life cover~ so that your loved ones are secured.
Health Insurance
Health complications increase with age, leading to increasing medical expenses. Moreover, costs associated with healthcare, like most others, are also likely to increase with time. Critical illnesses are also on the rise due to changing lifestyle choices. So, it becomes necessary to invest in a health insurance policy as well. This can help during health-related emergencies and keep your retirement funds intact.
Public Provident Fund (PPF)
PPF is another savings scheme by the Government of India. The government fixes the interest rate for PPFs. It has the double benefit of having tax-free* returns and providing tax* benefits on contributions towards PPF under Section 80C of the Income Tax Act, 1961. The tax benefits add to the returns from PPFs, making them an attractive option to invest in.
Investment in Mutual Funds/Equity
It provides a higher rate of return and can ensure financial stability in retirement. However, navigating the fluctuating market can be a hassle for new investors.
Community Manager.