Most people in India believe that saving money is the only way to be financially independent and stable. We think that saving money can gives us a secured financial future. However, it is a fact that urban Indians do not pay much attention to their retirement plan. However, to have a secured future and hassle-free financial life, you need to have a retirement plan in place. Most of the people in India have this misconception that retirement planning can be expensive and is limited to the rich. In such cases, financial priorities weigh down on retirement plans such as childcare, medical emergencies, and improved living standards. This makes it difficult to save any money and invest in early retirement planning.
7 Benefits of Early Retirement Planning in 2021
Here are seven benefits of early retirement planning, which may interest you to start your retirement planning as soon as possible, if you do not have a retirement plan yet:
1. Tax benefits of retirement plans
Tax benefits are one of the major advantages of having an early retirement plan. By investing your income in infeasible plans, you get to save some tax. Furthermore, retirement plans help you diversify your tax payments.
2. Safeguard your assets and have a secure future
You do not need to liquidate your assets for a better retirement income. By investing in a retirement plan, you do not need to rely on your assets. Thus, early retirement planning can help you have a secure future.
3. Better returns on your savings
By safeguarding your savings in the bank, you get minimal benefits. Investment options help you to maximize your profits by giving you better returns. Investing your money in retirement plans has a higher return than bank savings.
4. The power of compounding for retirement corpus
We have a common belief that by saving our income, we can build an adequate retirement corpus. However, that is an inefficient plan as we did not factor in the inflation rate. The power of compounding helps you have a better retirement corpus.
5. Unprecedented emergencies
A retirement corpus helps you sustain unprecedented medical emergencies. By having a retirement plan, you can fall back on funds as and when required. Remember that with age, your medical expenses are bound to grow.
6. Support your dependents
By having a concrete plan in place, you can support your dependents. Retirement plans act as a financial cushion and give your dependents financial security. You can ensure that there is no loss of income after retirement with smart financial planning.
7. Start early for maximum benefits
To reap the maximum benefit of your retirement plan, you will have to begin early. The best choice for any early retirement plan is to begin investing in your early 20s. By doing this, you extend the tenure, and you can pay lower premiums.
However, if you begin in your late 20s or early 30s, you can make up for any shortfall by bridging the gap. Fix your retirement age and needs, and start investing in a retirement plan.
For example, Akash and Shravan have always dreamt of early retirement. However, both of them followed different plans to save for retirement. Shravan believed that saving would help him build his retirement corpus. He tried saving a part of his income every month for a retirement plan. Akash began building his retirement corpus early in his 20s by investing a portion of his income in Guaranteed Income4Life plan by Canara HSBC Oriental Bank of Commerce Life Insurance. Akash would set aside a part of his income for his investments.
In the end, Akash could realize his dreams due to his smart financial planning. Shravan was only privy to a meagre amount and ended up working for a longer period.
To avoid this from happening with you, follow these 3 steps:
1. Factor in your existing financial situation
Before investing in a retirement plan, you need to assess your current financial situation. This includes an assessment of your assets and sources of income.
2. Have a tangible retirement and financial goal
Fix a retirement age and establish financial goals for yourself. This can include setting a target for your retirement. For instance, you want an early retirement at 50. You can now choose a plan that will help you retire at 50 with viable options.
3. How much of a risk appetite do you have?
Risk appetite is a major aspect of retirement planning. By assessing your risk appetite, you can devise a suitable plan for yourself. This also depends on your current financial situation and the financial goals you want to establish later.
Choose a Retirement Plan that Best Suits your Needs
Early retirement planning is necessary for a sustainable financial goal. By having a retirement plan in place, you get to accomplish all your financial goals. With Canara HSBC Oriental Bank of Commerce Life Insurance, you get to avail yourself of a flexible retirement plan and build your retirement corpus. Understanding and knowing your options helps with better retirement planning. We have a comprehensive set of plans to kick start early retirement planning. Browse through our plans to customize your goals and changes your requirements. From securing a guaranteed income post-retirement to providing a life cover – our life insurance plan provides you with a safety net.