Most people will advise you to start retirement planning just a few years into starting your first job. That is an ideal scenario. It is not possible for everyone to do so with student loans and other responsibilities. About 60% of Indian millennials do not have a plan for their retirement. For a lot of youngsters, it gets easier once they are in their 30s or 40s and settled. Here are some of the best options for these age groups to acquire a good proportion of wealth to sustain after retirement.
It is a voluntary investment scheme by the Indian government, open to all kinds of employees. Upon retirement, you can withdraw 60% of your corpus, while the remaining 40% goes towards an annuity plan. This way, you have a regular income after retirement, plus a lumpsum to take care of larger expenses. This scheme has been known to offer better returns than the Public Provident Fund. It is a retirement plan for people with a lower risk appetite, which is ideally people in their 30s and 40s. A portion of the investment is put in equities, and this portion reduces each year, thus increasing safety of your savings over time. NPS also offers a tax deduction upto Rs.2 lakhs. There are also provisions for early withdrawal, lest you need the money for emergencies and major expenses like a wedding. Plus, if you are not happy with the performance of your fund, you can easily change the scheme or your fund manager.
Mutual funds are another option for retirement planning with a balance of potentially high profits and safe investments in debt. In fact, they are one of the few instruments which can tackle inflation. Even if you start investing at 40, a Systematic Investment Plan can accumulate enough for you by the time you retire. Under this plan, you invest a fixed sum of money in your selected fund every month, which makes it light on your wallet too. Even if you already have a retirement plan in place, you can enhance it with a mutual fund investment.
Contrary to popular belief, you can very well go for an insurance plan in your 40s. A good choice for retirement planning would be a whole life insurance plan which offers a return of premium. Insurance plans are for those who do not want to risk investing at all. A good insurance plan like the iSelect Star Term Plan will secure you while offering a lot of flexibility.
Although it is a term plan, Canara HSBC Oriental Bank of Commerce Life Insurance’s iSelect Star Plan offers 100% return of premium as an option if you outlive the policy term. Considering that you will need your finances for other major expenses in your middle ages, this plan offers you the freedom to pay premiums for a limited duration and still enjoy coverage for the entire policy term. Based on your ensuing life stages, you can choose between increasing or decreasing sum assured. In case of death or terminal illness diagnosis, whichever happens earlier, the entire death benefit is paid to the policyholder.
Unit-Linked Insurance Plans are a combination of life insurance and investment- exactly the kind of convenience you need in your 30s and 40s. They can save you from the process of opting for separate investment and insurance products, and help you stay secure and generate profit at the same time. Plus, they have multiple tax benefits. They come with a lot of flexibility for switching funds, so you can choose to minimize your risk when you want to. One of the best ULIPs that you can consider for your retirement plan is the Invest 4G plan.
The Invest 4G plan by Canara HSBC Oriental Bank of Commerce Life Insurance is a great way to invest in your dreams at almost any age. It offers a wide choice of 7 different funds and 4 different portfolio strategies to invest with, along with a wholesome life cover. It even offers a Return of Mortality charge so that your actual earnings aren’t reduced. Loyalty Additions and Wealth Boosters are some features that will give your savings an extra push. Moreover, you have the option to partially withdraw your money in order to meet contingencies.
Conclusion: Retirement planning after the age of 30 is not only possible, but can be lucrative as well. Once you find the right plan or combination of plans, you will be all set for your post-retirement life.
Sources: Mutual Funds for Retirement Planning : How to invest & Benefits of planning