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5 Best Tips to Plan for Retirement

dateKnowledge Centre Team dateJune 15, 2021 views192 Views
Retirement Planning | Buy the Best Saving Plan | Retirement and Pension Plan

Retirement preparation is a multi-step, time-consuming process. You'll need to create a financial reserve to finance a safe, secure and enjoyable retirement. The fun part is why it's essential to pay attention to the serious (and maybe boring) part of the process: figuring out how you'll get there.

The best retirement plan would allow you to develop a comprehensive view of your life goals as well as the road to achieving them. You will guarantee that your family's quality of life is not jeopardized after retirement by saving and accumulating a sizable retirement fund. Rather a well-devised retirement plan will help you live a happier life in the later stages.

How to Plan your Retirement?

Retirement planning is a gradual process and you may need to make several changes to your plan throughout the years. As per your changing goals, milestones, and life stages, your ideal retirement life planning may also change. However, you need to start somewhere so that you are on the right track. Here are 5 tips to plan a peaceful retirement:

1. To retire peacefully, start investing early

Start pondering on the question of your retirement as soon as you can. You must recognize that being young offers you an advantage that not everybody has 'space.'

Beginning to invest early in life would enable you to build up the requisite corpus without putting too much pressure on yourself. It also offers you a sense of security. Barely one in five Indians consider inflation while planning for retirement. As time passes, inflation grows, and to keep up with the changing cost of living, you have to consider inflation while planning for your retirement.

Understand how saving at an early age of life will help you during your retirement.

2. Choose a retirement age

Estimating your retirement age is crucial because, after this age, your daily revenue stream will cease or at the very least be significantly reduced (in case you are eligible for pension). To meet your retirement needs, you'll have to rely on your investment accounts. The average retirement age is 60, but many people prefer to go above or below it.

3. Calculate your retirement spending requirements

It will be easier to define the size and type of a retirement portfolio if you have reasonable assumptions for post-retirement spending patterns. The majority of people agree that their annual spending would be 70% to 80% of what it was before after retirement.

This presumption is usually shown to be unrealistic, especially if the mortgage isn't paid off or if unexpected medical costs arise. Retirees also can spend their first years after retirement splurging on vacations or other bucket-list items. Most of the retirees are not even aware of the amount required to maintain a decent lifestyle after retirement.

4. Reduce expenses that aren't required

Suppose you can't invest right now to meet your goal, cut down on unnecessary expenditures. Weekly entertainment, impulsive acquisitions, working out, overseas vacations, and so forth are all examples of avoidable spending. By reducing these costs, you will spend more to get closer to your goal repository.

5. Keep an eye on the estate planning

Another essential part of a well-rounded investment strategy is estate planning. Having a decent estate plan and life insurance policy means that your properties are allocated according to your wishes and that your loved ones are not financially disadvantaged after you pass away. A well-thought-out strategy will also help you escape a costly and time-consuming public relations campaign.

What is the Need to Save for your Retirement?

ULIPs for planning your retirement

A retirement plan would allow you to develop a comprehensive view of your life goals as well as the road to achieving them. You will guarantee that your family's quality of life is not jeopardized after retirement by saving and accumulating a sizable retirement fund. Rather a well-devised retirement plan will help you live a happier life in the later stages. Remember, it is never too late to start planning for your retirement. If you have not started early, you can always start now.

Whatever your vision is, you must start planning now since you will no longer be paid a pension or have a steady source of income after you retire. And you'll need a financial backup to cover your living bills and live out your golden years. With the help of this article, planning a retirement shall be a much simpler task.

The only distinction is that you want to live after retirement, but you do not have a steady stream of profits. You must still be self-sufficient to maintain your independence.

Ask these 5 questions before buying the best retirement plan.

Retirement Plans by Canara HSBC Oriental Bank of Commerce Life Insurance

Canara HSBC Oriental Bank of Commerce also offers a wide variety of Life Insurance Plans to cover your loved ones in the event of your untimely death. You may buy a unit-linked individual insurance plan, or you may invest in the best savings plan that you can tailor to your priorities and needs. Understand your investments and insurance needs and create an unrivalled mix of investment portfolio.

1. Guaranteed Savings Plan

Canara HSBC Oriental Bank of Commerce Life Insurance Guaranteed Savings Plan provides guaranteed rewards and the option to pick your savings horizon. This life insurance cum savings plan enables you to save regularly to meet your financial goal in the long-term. It enables you to strive and attain your goals even if anything bad happens to you. The plan offer assured returns that are not dependent on the vagaries of the capital market. Customise your savings horizon as per your financial needs during your retirement.

Learn more about Guaranteed Savings Plan.

2. Guaranteed Income4life

Canara HSBC Oriental Bank of Commerce Life Insurance Guaranteed Income4Life is a non-linked, non-participating individual insurance savings cum security plan that provides guaranteed payouts and monthly income to meet both long-term and short-term financial objectives.

A very personalized life insurance policy provides varied flexibility in terms of premium payment alternatives, among other things. Guaranteed Income4Life is a highly customizable savings plan that allows you to align the plan as per your life stages and needs. From providing lifelong protection for you and your spouse to fulfilling your kids education needs – this plan is your friend for all the promises you have made to your loved ones.

3. Pension4life Plans

Canara HSBC Oriental Bank of Commerce Life Insurance Pension4life Plan, an annuity scheme in which you will get a fixed level of annuity instalments in return for a Purchase Price, is a wise way to ensure a daily assured income stream as per your needs after retirement. You have the option to collect monthly payments for the rest of your life or that of your partner. Also, you can choose to pay annuity instalments on an annual, half-yearly, quarterly, or monthly basis.

Striking a balance between fair return targets and a reasonable standard of living is one of the most challenging aspects of designing a balanced retirement package. Focus on building a flexible strategy that can be changed daily to match changing market dynamics and retirement goals.

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Frequently Asked Questions (FAQs) for Retirement and Pension Plans

The premium is one of the most important factors to consider before buying a policy. Many people buy a life insurance policy with a high sum assured but are unable to process the premiums for the entire premium payment tenure. You can get a better idea of the premium outgo with the Premium calculator available in the ‘Tools and Calculator’ section of www.canarahsbclife.com.

The Invest 4G plan offers three benefit options to choose from. If you have opted for the Life Option or Whole Life Option, the insurer will pay the nominee(s) death benefit if the policyholder meets with an unfortunate incident. However, in the Life Option with Premium Funding, the policy continues even after the death of the policyholder. The company pays the remaining premiums until the policy matures.

Life is unpredictable and so it is important to prepare for all eventualities. If you regularly save a substantial amount of your income for retirement, the corpus may expand to a comfortable level before retirement. In case you become disabled and are unable to contribute to the retirement plans, most plans will continue to multiply your savings. The amount already accumulated will continue to grow and besides the existing plans you can also choose to invest in pension schemes specifically designed for people with disability.

Investment in ULIPs like Invest 4G plan qualifies for tax deductions under section 80C of the income tax law. The maturity benefits of ULIPs are also tax-exempt under section 10 (10D) of the Income Tax Act, 1961. However, if the premium paid during the policy term is more than 10% of the sum assured, the maturity proceeds will be taxable.

The concept of early retirement is catching up fast in India, but there are no specified ages for early retirement. While in some western countries the age between 35 and 45 is considered favourable for early retirement, in India the ideal age is 45-50 years. With the right planning and investments, it is not very difficult to retire early.

At the age of 35-40, people generally have several responsibilities such as children’s education and various EMIs. It is difficult to spare a substantial amount of income for retirement. Depending upon the needs of the household and the lifestyle, one should aim to save around 40-50% of his/her income. Around 10% of the income should exclusively be allocated for retirement planning. Here are some tips to choose the best retirement plan.

  • Focus on your needs: It is easier to formulate a strategy when the goal is clear. Make an estimate of the amount required to sustain your life. Take inflation into account and zero in on the targeted corpus.
  • Research thoroughly: Conduct thorough research before investing in any financial product. Read the term and conditions properly and try to understand how an investment product fits your needs.
  • Consider different products: The market is awash with all kinds of investment products. Do not follow conventional advice as the need of every person is different. Take into consideration all the suitable products, conduct an objective analysis and then invest.

Owning a house is a cherished dream for many. There are several ways to save for a new house, but in urgent cases, people may be tempted to withdraw from their retirement fund. There are various financial products for retirement planning, and all have different withdrawal rules. In the case of the National Pension Scheme, partial withdrawals for special purposes like buying a house are allowed only thrice during the policy tenure. However, to avail the withdrawal facility, you should be an NPS investor for at least 10 years and you are permitted to withdraw only 25% of your contribution. If you have a PPF account, you can withdraw 50% of the accumulated amount, but only after staying invested for at least 6 years. The Invest 4G plan also allows partial withdrawals after five years of investment.

The quantum of monthly savings depends on the specific needs of the buyer. Financial advisors, however, suggest people save around 15% of the monthly income for retirement.

Retirement plans such as NPS have a very low entry threshold. It is also open to all and anyone can open an NPS account and start saving. A small business can also invest in Invest 4G plan from Canara HSBC Oriental Bank of Commerce for as low as Rs 5000 every month.

The choice between paying off a student loan or start a retirement account is not a difficult one. Starting early for retirement planning has its own advantages but extending the student loan will increase the interest burden. You will have to find a balance between the two. Try to pay off the student loan as soon as possible, but do not hold back on investing in a retirement account.

Most people nominate their spouse to receive retirement benefits in their absence. But a spouse is not automatically entitled to be the beneficiary of a retirement account owned by the other spouse.

Gold is a safe investment asset and investors often flock to the yellow metal to stabilise their portfolios. Holding a small quantity of gold can be considered as the intrinsic value of gold remains intact. You can also choose to have an exposure to gold through ULIPs. ULIP funds invest in a variety of asset classes and some fund options also have a small exposure to gold. You can choose fund options with gold to have a small and indirect investment in gold.

While there are no explicit rules barring the use of retirement account to finance real estate, it may not be advisable to do so. For instance, you are allowed to avail loan from the PPF account from the third financial year. The loan can be used to finance real estate, but it would defeat the purpose of having a dedicated retirement account.

While there are no explicit rules barring the use of retirement account to finance real estate, it may not be advisable to do so. For instance, you are allowed to avail loan from the PPF account from the third financial year. The loan can be used to finance real estate, but it would defeat the purpose of having a dedicated retirement account.

The government has allowed all central government pensioners to open a joint account with their spouses.

Vesting date or age signifies when your pension plan’s accumulation phase is over and the distribution phase can begin. For example, in a deferred annuity plan, you may have a vesting date which is 10 to 30 years away depending on your age at entry. You will continue to invest or stay invested till the vesting date. After the vesting date or age, you can start receiving the pension or withdraw the money from the plan.

The steps may differ from plan to plan. However, you can buy the online retirement plans following the steps below:

  • Retirement Calculator: Use a retirement calculator to estimate your corpus need and expected monthly investment amount to achieve it
  • Choose Plan: Select the online retirement plan you want to start investing in
  • Contact Information: Fill in the personal details including the contact information. Make sure to put the correct e-mail ID which you can access since all future communication about the policy will take place via e-mail.
  • Define Your Investment: Select the goal, investment term, investment frequency and amount you want to invest (based on the calculator estimate)
  • Select Fund Allocation: Online retirement plans give you the option to invest in multiple assets including equity funds. You can select the ratio in which your premium will be allocated to these funds as per your risk appetite. Then select one of the portfolio rebalancing strategies.
  • Select Withdrawal Plan: You can withdraw money based on set milestone or systematically from the plan after the lock-in period. Select the options for withdrawal as per your plan.
  • Review Plan & Investment Details & Complete the Application Form

You can pay the premium amount before or after completing the application form to start investing.

The best time to plan your retirement is when you are planning your career. However, this may not be the time when you really start investing money for your retirement. You must start investing in your retirement plan as soon as you start earning.

Retirement is the only financial goal you cannot repair with other means of funding like a loan. Thus, developing the habit of investing with every income you have is the best way to have a comfortable retired life.

Insurance allows your family, especially your dependent spouse to continue living without financial worries if anything happens to you. Also, insurance may help you save enough for retirement in case of permanent disabilities. Additionally, life insurance retirement plans allow you to build a good retirement corpus with bonus additions.

Yes, you can change the nominee of the policy anytime you need. If you are using an Electronic Insurance Account (EIA) to manage your policies, you can change the nominees anytime from this account. Otherwise, you can contact the customer care to update the nominations on your policy.

You can opt for auto-debit of the premiums from your savings account. You can also pay the premiums online using your debit card, credit card or a payment wallet.

You can get Rs. 1 Core pension plan using the online retirement calculator. The calculator will assess your eligibility and provide you with the probable monthly or annual investment to achieve the goal. If the amount seems feasible you can complete the purchase online or set an appointment for a qualified advisor to help you in the process.

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