Attention newlyweds: life seems all good and peppy until the reality strikes in. While it is undeniably one of the happiest chapters of our life, it still requires a lot of planning and implementation. Let’s address the elephant in the room. Although you maybe young and thriving, you need to think about retirement and plan for it way ahead. Whether it’s a life insurance that you are considering to invest in, or you want to buy that handcrafted dinnerware you set your eyes on last week – you have to include your spouse in the decision making process. Here’s a guide to plan for your retirement if you have just tied the knot. Remember, the sooner you start saving for rainy days, the better it gets.
In this article, we will discuss:
- What is retirement planning?
- When is the right time to plan for retirement?
- Benefits of retirement planning
- 5 tips to prepare a retirement plan
- Top retirement and pension plans to consider
What is Retirement Planning?
Time to drop the truth bomb – you cannot work forever. What will happen when you decide to stop working? What you or anyone who is dependent on your income will do when you retire? The average life expectancy is also increasing, which brings in the chances of medical emergencies. That’s when retirement planning comes into the picture. A plan for retirement ensures that your savings or income from any source will allow you to enjoy the lifestyle you want.
Primarily, retirement planning is about getting your finances in order so that when you stop working, you don’t face any difficulties in maintaining the lifestyle that you have lived with.
You are partners for life. So, it is needless to say that you both should contribute to prepare a retirement plan for your future. The approach you follow to manage your finances may evolve over time with respect to your needs and financial circumstances.
When is the Right Time to Plan for Retirement?
The best time to plan for retirement is NOW! Start your preparation as early as possible as retirement plans yield in benefit resulting from compounding interest. Retirement planning is a long-term process and it may require you to switch your saving pots often till you find the right savings plan. In other words, start planning for your retirement the day you receive your first paycheck.
If you already have a plan and same is with your partner, you both should sit down and discuss about merging both your plans because you are on the same journey. Keep your financial goals, retirement expenses and your current income in account while planning for retirement.
Benefits of Retirement Planning
There is a wide array of benefits of retirement planning and one of the most important one is – living an uncompromised and peaceful life even after you decide to stop working. Listed below are a few benefits of retirement planning:
- Returns that Beat Inflation
If you choose to invest in retirement plans, it may help you get returns that beat inflation. However, you have to ensure that you choose the best savings plan to get favourable returns. So, when you start investing in a savings plan for building your retirement corpus take inflation into account. Choose a plan that has the highest degree of customisation. Our needs and lifestyle change as we age. Find a plan that allows you to increase your savings cover as per your changing life stages.
- Tax Benefits
Myriad of investment plans are already flooding the market. If you haven’t invested in any of them, then it’s high time to pull your socks up and find an investment plan. You can start with a life insurance plan too. Choose a savings plan and start your investment. It helps in saving tax as such investments qualify for tax exemption under Section 80C of the Income Tax Act.
- Stress-free Retirement Life
This is the ultimate benefit of having a retirement plan. You can enjoy your retirement days and reap the benefits of all the savings that you have been doing over the years. Such investments provide flexibility to choose “regular payout option of maturity benefits”. This will act as a regular income stream and you can lead a worry-free life without being a burden on anyone.
5 Tips to Prepare a Retirement Plan
Let’s start from the start. To accumulate a sufficient corpus for retirement, you need to plan for your retirement early. However, if you do not plan well in advance, it may turn out to be a little difficult for you later in life.
Here are 5 tips to help you prepare or choose the right retirement plan for your protection needs:
- Calculate your Joint Net Worth
As a couple, it is important to understand the combined financial health so that you can find the perfect retirement plan to invest in. Calculate how much you both earn and what financial goals you both have before buying a retirement plan. Both of you may have to prepare a budget for your future expenses so that your finances stay on track.
- Determine the Expected Expenses
First of all, calculate your current expenses and also consider your partner’s expenses, even if they are employed. Remember that your lifestyle may change over the years and so is the case with your partner. Therefore, calculate your everyday expenses by taking inflation into account for your retirement period.
- Choose an Investment Horizon
Decide the age at which you want to retire. Then, calculate the years that are left for savings. The result is the investment horizon. Also, consider your health condition and your partner’s before investing in a retirement and pension plan. The current condition of your health will have an impact on the premiums that you have to pay when you opt for a savings plan that offer life cover too.
- Invest in Saving Plans Diversifies Investments
When you are looking for the best retirement plan to save something aside, you must not overlook this option. Plans for retirement should offer option to diversify your investments. There are saving plans that allow you to invest in a single fund or in a combination of funds, for example, Invest 4G.
Know more about Invest 4G.
- Avoid Using your Retirement Funds before the Determined Period
This is one of the most committed mistakes. People generally use their retirement funds way before they retire. It has a significant impact on the retirement corpus. Emergencies do not knock on the door with a notice. However, it is better if you keep aside some portion of your monthly income in an emergency fund. Do not treat a retirement fund as an emergency fund. A retirement plan is designed to help you through your retirement period without much struggle.
Top Retirement and Pension Plans to Consider
Investing in the best retirement plan will yield beneficial result during your retirement days. You have to choose a retirement plan that works best for your life goals as every plan may differ from another. To buy the best plan for retirement, you must determine the corpus that you are aiming for. And accordingly, you need to find a plan that is flexible.
Canara HSBC Oriental Bank of Commerce Life Insurance has an array of retirement and pension plans that you may consider.
- Invest 4G
It is a Unit Linked Insurance Plan that is highly customisable and offers 8 fund and 4 portfolio strategies to invest money. In addition to that, it has three different cover options to choose from. So, you can easily align the savings plan according to different life stages. Systematic withdrawal option creates additional income stream during the term of the policy.
- Guaranteed Income4Life
It is a savings cum protection plan that offers guaranteed benefits as well as regular income. You may use this plan to align both long-term and short-term financial goals. Guaranteed regular income ensures that your post-retirement expenses are well-managed with the corpus that you have built over the years.
Know more about Guaranteed Income4Life.
- Guaranteed Savings Plan
This plan provides life cover for the entire policy term while you pay premium only for a limited period. Also, Guaranteed Savings Plan offer guaranteed benefits at maturity. Customise your savings horizon to enjoy stress-free retirement days.
The approach to retirement planning has evolved over the years. Some people may enjoy the guaranteed income that comes with a retirement and pension plan, while some may rely on government pension schemes for their retirement days. The crux is – you need to have plenty of money during your retirement days to take care of you and your partner’s needs. In short, the more you both are prepared, the better your retirement period will be.