6 Tips to Buy the Best Retirement & Pension Plans in 2026

Written by : Knowledge Centre Team

2025-10-14

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The most difficult financial challenge anyone can face is planning for a secure retirement. Unfortunately, many working people are unprepared for this task. Since retirement and pension plans are only intended to replace a portion of wages after retirement, those less than 5 years away from retiring must devise a strategy for safely crossing the finish line. Ensure that you select the best retirement plan tailored to your financial needs and current affordability.

Key Takeaways

Assess your savings, expenses, and assets to create a realistic short-term budget for retirement.
Diversify income with pensions, part-time work, and investment returns post-retirement.
Align your retirement goals with your lifestyle and expected healthcare needs.
Identify and close savings gaps by cutting expenses and increasing contributions.
Select investment options that align with your age and risk tolerance to safeguard your savings.

Key Tips to Choose the Right Retirement and Pension Plan

Planning for retirement involves more than just picking a savings scheme. It requires a clear understanding of your financial position, future needs, and lifestyle goals. Here are six essential steps to help you make informed, confident decisions about your retirement plan.

Evaluate Your Financial Situation and Needs

You can be financially unprepared for retirement and still not realise it. Evaluating your current financial situation is necessary to develop a realistic roadmap that addresses any shortfalls. The roadmap or budget you create can be monthly, bi-monthly, or quarterly. But it should be realistic and for a short amount of months.

It is essential to recognise that a person can reap significant benefits by taking a few crucial steps in the present, as these small actions will have a profound impact in the long run. Here are a few practical steps to begin with:

Create a basic budget to track your income and expenses realistically.
Expenditure on luxury items, gym memberships you never use, and membership to the club are all costs that can be avoided once you plan for retirement.
Every individual should begin by calculating the amount of money they have in savings accounts.
Specific investment savings, corporate retirement funds, and pension schemes are included.
Open or allocate taxable accounts if they want to use them only for retirement.

However, even with the availability of those accounts, an individual should ensure that the accounts don't have funds set aside for unnecessary expenditures.

List Down All the Different Sources of Income

The majority of monthly income in retirement should come from existing retirement accounts, although it may not be the only source. Additional income can come from various sources other than investments. There are various options and sources available today that help individuals diversify their sources of revenue and income.

Here’s how you can map your potential income sources:

Retirement accounts: Such as EPF, NPS, or private pension schemes.
Pension schemes: If your employer offers one, factor in the monthly benefit.
Part-time work or consulting: Continuing work in a reduced capacity can supplement income.
Rental income or property returns: If you own a second property, it can serve as a regular source of income.

If you're lucky enough to be compensated by a pension scheme, include that in your projections. When retired, people can still add up earnings from a part-time career.

Make Some Retirement Goals According to Your Lifestyle

This remains a crucial consideration when it comes to pension plans. Your retirement goals should reflect the kind of lifestyle you want to maintain after you stop working. Whether you prefer a quiet life in a smaller home or dream of travelling the world, your financial needs will differ accordingly.

Use the following checklist to define your retirement goals:

Estimate daily costs after retirement: These include groceries, utilities, transport, and essentials.,
Account for lifestyle spending like eating out, travel, and recreational events.
Include: Health and treatment costs, Such as life insurance premiums, long-term care insurance, prescription medications, and doctor's appointments.
Set a realistic monthly budget based on your expected expenses post-retirement.

Being clear about how you wish to live after retirement will help you choose a plan that aligns with both your income needs and long-term security.

Did You Know?

Financial Independence, Retire Early (FIRE) method's 4% rule suggests withdrawing only 4% of total savings in the 1st year, adjusting for inflation.

Source: Wikipedia

Deal with Shortfalls

All of the figures you've gathered so far can help you address the most important question of all: Do your retirement savings surpass the sum you'll need to fund your retirement completely? If you answered yes, it's essential to continue funding your savings plans to maintain momentum and stay on track. If the answer is no, you'll need to work out how to bridge that gap.

Here’s how to address potential shortfalls:

Compare your total retirement savings with projected expenses.
If your savings fall short, increase your monthly contributions where possible.
Cut down on non-essential expenses, such as dining out, subscriptions, or impulsive purchases.
Rebalance your current financial habits to focus more on long-term gains.
Combine saving more with spending less to speed up the gap-bridging process.

If your savings are already sufficient, stay consistent with your investments to stay on track. But if not, now is the time to tighten your belt and make deliberate changes. With just five years remaining for retirement, you may need to combine aggressive saving with smart expense cuts to see meaningful results. Calculate the Risk Tolerance

At different ages, your risk tolerance varies, and it plays a crucial role in determining how your retirement portfolio should be structured.

Here are some key points to consider:

Risk tolerance decreases with age; as you approach retirement, reducing exposure to high-risk assets becomes increasingly important.
Retirement portfolios should aim for stability, with a balanced mix of various income instruments.
A bear market could derail your plans to quit your job only a few years before retirement.

To deliver both prudent growth and dividends retirement portfolios should include:

High-quality, dividend-paying stocks for consistent returns
Investment-grade bonds that offer capital protection and steady income

Understanding your comfort with risk and adjusting your portfolio accordingly is essential to protect your hard-earned savings and support your income needs during retirement.

Consult a Financial Advisor for the Best Pension Plans

Money management is a skill that only a few people have mastered. Retirement planning involves multiple decisions, and expert guidance can simplify the process.

Here’s why speaking to a financial advisor is a smart move:

They help you understand your options based on your goals, current savings, and risk profile.
Advisors can recommend suitable pension products that align with your expected retirement age and lifestyle.
They also help you identify tax-saving opportunities and create a plan that’s both practical and future-proof.

Consulting a financial advisor or a certified financial planner early on ensures that you make informed decisions at every step of your retirement journey.

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Conclusion

Retirement planning doesn’t have to be complicated, but it does require intention, clarity, and timely action. By assessing your finances, setting lifestyle goals, and choosing the right income sources, you can build a future that’s both secure and stress-free. Start now, even if you feel late. It’s never too early or too late to take control of your financial future.

Glossary

Diversified Investment: Way to reduce risk and increase profit is to diversify investment by putting funds in different asset classes.
Assets under management (AUM): The total value of assets that an investment company manages for its clients.
National Pension Scheme (NPS): A market-linked, voluntary, and tax-efficient scheme that helps you to save for your future.
Retirement Portfolio: Sum of all your investments in various accounts, which is to provide you with a stable income after retirement.
ETF (Exchange-Traded Fund): Pooling of funds in one place from where investors can easily invest in stocks, bonds, or other assets.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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