When you begin retirement planning just before retirement or even when there’s enough time left before retirement, you should ensure to have the correct information. Since retirement planning usually involves the purchase of a pension plan, here are nine things you ought to know and remember.
1. Availability of options
There is a range of financial instruments available today you can opt for. Once you have a clear understanding of what each plan has to offer, you can choose on the basis of various factors such as your goals, budget, age, lifestyle, risk appetite, and more.
2. Starting point
Irrespective of how small you may start; it is better to begin your retirement planning journey earlier rather than later. The longer you wait, the lesser the number of years you may have for your investments and savings to grow the way you would want them to.
3. Financial management
Once you begin retirement planning and invest in the right instruments, it is important to build financial discipline and stay consistent. With investments, the power of compounding is more likely to show results in the long run if consistent efforts have been put.
4. Life insurance component
If you are expecting to have any dependents in your old age, including your spouse, you may want to also consider a life insurance plan. It can be with an investment component, such as a ULIP, or a simple, low-cost level term life insurance plan.
5. Number of plans
Relying on a single plan, whether it be high returns or low, may not be ideal for all potential scenarios. Depending on your investment budget, you can choose a combination of investment and savings plans for pension, with varying risk and return levels.
6. Investment diversification
When it comes to retirement planning, one often thinks of plans marketed towards retirement, such as annuity and pension plans. However, it would be wrong to assume you have to limit yourself to these options. Consider having investments such as mutual funds to fortify your retirement corpus.
7. Tax exemption**
When choosing the instruments to add to your retirement plans, check whether your investments and the returns from these plans are eligible for exemption. These deductions can be claimed by taxpayers filing under the old tax regime in accordance with the prevalent tax regulations.
8. Retirement planning calculator
A retirement planning calculator can help you understand your superannuation requirements and how you can meet them. Use these online tools regularly to review your investments and revisit your strategy to stay on track to meet your goals.
9. You can include your spouse
When buying an annuity plan or a life insurance cover, you can opt for a joint cover which allows for your partner to be included in the coverage. In this case, if one person were to pass away, the other could claim a benefit and continue the annuity.
The realities of retirement can be quite harsh if you have not engaged in retirement planning at the right time. To have a comfortable retirement, it is essential to start planning early and ensure your financial planning is accommodative of the retirement you seek.
** Tax exemptions are as per applicable tax laws from time to time.**
