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How to avoid running out of money during retirement?

dateKnowledge Centre Team dateAugust 19, 2021 views334 Views
Retirement Planning | Best Retirement Plan | Guaranteed Savings Plan

Life can be compartmentalized into different stages with each stage having a broad purpose to attain and move on. All are not fortunate to live through all the stages and those who do live through all the stages may not always experience what that stage is designed for. The exceptions are statistical outliers whereas the vast majority go through all the humdrum of life as designed by the creator.

Childhood is spent in curiosity whereas early adulthood goes in building careers, rearing families, buying life insurance to protect your loved ones and exploring life. The later years are dedicated to consolidating ones’ learnings and earnings besides nurturing the next generation. The final lap or the sunset years are spent closer home, reflecting on life and finally settling into oblivion.

The childhood and growing up years are supported by parents whereas the post-retirement years cause concern because no one can predict the actual life span. The 70-year average means there will be people who will live much beyond that number too.

Enjoy or Endure Retirement?

Fairy tale stories depict retirement as second innings when the old couple becomes free birds again. Travel around the world, do as they please and enjoy every moment of their newfound private space. The kids are independent, the mortgages are paid off and all those items on the wish list now see the light of the day. Far from it. The reality is scary and in contrast to the rosy picture that is generally painted. Lack of financial discipline is putting people at risk of running short of money especially when out of employment during recessionary periods and post-retirement.

How to Have Enough for Retired Life?

Start Early! Whatever you plan to do for a comfortable retirement, start working on it now. 25 is not too early to plan for retirement and 40 is not late either. Some PRO tips to get yourself started on retirement planning:

1. Taper Down on Debts

It is natural to get impulsive to avail credit for buying goods, appliances and holiday packages. Debts taken for buying appreciating assets such as real estate, gold etc is worth it because the returns on investment will be far more than the cost of debt. Depreciating assets burn holes in the pocket.

Spend wisely. Even loans on appreciating assets should taper down with time. Do not carry any baggage post 55/60 years of age.

2. Build a Large Retirement Corpus

If you spend Rs 30,000 to manage your living expenses, this amount, when factored with inflation, will become Rs 90,000 in 20-30 years from now. To get such a pay out from your annuities or pension scheme, you will need a corpus of about Rs 3 Crores.

3. How to “Save” for Building the Corpus

Saving and Wealth Generation are different concepts altogether. Ramesh, aged 40, sets aside Rs 10,000 each month and keeps it in his savings account or fixed deposits that yield 3% to 5% per annum. At an optimistic 5% interest rate, Ramesh will have approximately Rs 40 lakhs in his kitty at the age of 60.



If you factor in the current rate of inflation of 5%, the real growth is actually zero. Building a larger corpus will strain your current lifestyle and health because you will strive to work harder to set aside more money. The trick is to rather make the money work harder than you do. Invest in assets that give inflation-beating returns and create wealth in the long run.

4.Invest in Guaranteed Income Plans After Retirement

Guarantees are trustworthy when assured by credible, reputed entities that have legacy standing and impeccable track records. Guaranteed Income Plans from Canara HSBC Oriental Bank of Commerce Life Insurance is one such investment cum insurance plan that gives you the safety of insurance while growing your wealth to keep you happy in your older years.

a. You can choose to pay premiums for a fixed term after which you will get “Guaranteed Annual Income” every year until maturity or until death.
b. On survival and at the end of the policy term, you will be paid the “Guaranteed Sum Assured”.
c. In case of demise or permanent disability, the insurer pays the future premiums.
d. In case of demise, the Sum Assured is paid immediately to the nominee. The fund value is paid on maturity.

How to Build an Adequate Retirement Corpus?

Retirement is an enigma. The uncertainties can be perplexing and create anxiety even in the most level-headed individuals. Thumb rules help you arrive at a figure that you may need by the time you hang up your boots and call it a day. This kitty is what you will have to draw on for the remainder of your life.

Investing in the right assets is important because you will not get a second chance to go back and rectify errors.

The “right assets” are always debatable and diversification helps spread out risks. So, you may invest in gold, real estate, equities and so on. Whatever you do, you must have a cushion to fall back on, should things go wrong.

Guaranteed Savings Plan and Invest 4G ULIP plans offered by Canara HSBC Bank of Commerce Life Insurance are a few investments that can offer this cushion. The guaranteed plan gives you a guaranteed amount on maturity, which you can estimate at the beginning of the investment. While Invest 4G provides the option to invest aggressively for better growth.

Learn how to check if your retirement corpus will be enough.

The tax-free maturity value from the plan ensures that the value of your savings does not deteriorate due to tax. Thus, you can use the entire amount at maturity to build a pension for your retirement. Additionally, the life cover implies that your family will be adequately safeguarded even if anything happens to you before you can build the corpus.

Guaranteed Pension Plans to Consider

Pension is another form of income. The only difference as compared to your income from employment is that pension comes from your hard-earned income itself, but invested and grown multi-fold by expert pension fund managers. For example, the Pension4Life plan pays pre-defined amounts, called “annuities”, each month after you retire until your death.

There are choices within this insurance policy, offered by Canara HSBC Bank of Commerce Life Insurance Company. You can opt for a single-life annuity wherein you get a pay-out till the end of your life OR opt for a plan that returns your invested amount to your nominee on your demise.

These 2 choices listed above can be applied to a joint-life annuity as well in which case your spouse/partner gets the annuity payments after your demise and returns the invested amount to the nominee after your spouse’s death.

Retirement is not as scary as it is made out to be-if planned well and begun early. Investing in wealth-creating assets will build that large corpus which can then be used to generate income streams in your older years.

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