Retirement is the phase of life that is to inevitably follow at the end of your work life. Preparing for it, well ahead of time,will give you the upper edge to make this phase relaxing and comfortable for yourself as well as your family. To do so, you need to focus onfinancial security which can be achieved by accumulating wealth for the post-retirement phase.

How to accumulate wealth?

There are several means of accumulating wealth to prepare for life after retirement. These include savings in banks, fixed deposits, post office savings, investment in National Pension System, investment in mutual funds, investment in retirement plans from insurance companies, etc. While deciding which among these are suitablefor effective retirement planning, you need to consider a few important things. Firstly, the money you invest should be relatively safe. Secondly, the money you save and invest should be able to grow to meet your long term retirement goals. Thirdly, it is critical to account for inflation while figuring out the exact amount of money you need to fulfil your post-retirement plans.If you study the pros and cons of the various options and match them to your needs, you will notice that investing in aretirement planby an insurance company is the best way to accumulate wealth for your retirement.

So what are these retirement plans and associated retirement benefits?

Retirement plans are specially designed pension plans that are designed to offer financial security when your professional income ceases after your retirement. These are provided by life insurance companies and work in two ways. Firstly, they let you save in your earning years so that you can build a substantial corpus. Secondly, the money you save is invested to further build the said corpus so that you can have sufficient financial support to carry your through your retirement with ease. ULIPs or Unit Linked Insurance Plans are specific retirement plans that cater to both the fund protection as well as the investment part, depending on the investor’s goals and risk appetite. In other words, they help accumulate and invest the funds to generate suitable returns over a long period of time. Post the retirement phase, through annuity, you can avail a regular income to keep you afloat with ease. As a result, retirement plans not just save your money but also help it grow to give you inflation-adjusted returns. Retirement plans are your answer too if you are wondering ‘how to retire early’. Simply use a retirement calculator to figure out the amount of money you need to save and invest in ULIPs in order to enjoy an early retirement.

Why should you get a retirement plan?

  • Life expectancy is rising, which emphasises on the need to save more for adequate financial support through a longer retired life
  • Retirement plans offer you a steady income post-retirement which helps maintain yourstandard of living by taking care of allyour day-to-day expenses
  • With health becoming a priority in old age, retirement plans help you afford quality health care,the cost of which is growing significantly with each passing day
  • It would assist you infulfilling other long-term financial goalsor plans you have been looking forward to take up after retirement, such as travelling, new hobbies, etc.
  • Retirement plans are also ideal in offering a safety net to your spouse to fall back on in case of your early or sudden demise
  • With proper saving and planning, you would allow your money to grow by the power of compounding to earn you attractive returns at a time when you actually need it
  • Retirement plans factor in inflation, as a result, when you invest systematically, you actually accumulate enough corpus to sail you effortlessly through retired life
  • Retirement policy premiums are subject to tax deduction under Section 80CCC of the Income Tax Act 1961
  • One-third of the accumulated sum can also be withdrawn tax-free at the time of retirement under the Section 10 (10 A) of the Income Tax Act 1961

We are living in a time when cost of living is growing steadily along with rising inflation. Investing in a pension plan is therefore wise to make the most of our earning years in preparing for a comfortable life of retirement ahead.

 

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