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What Are The 5 Simple Steps To Create A Perfect Retirement Plan?

dateKnowledge Centre Team dateJune 15 2021 views212 Views
Perfect Retirement Plan | Best Pension & Retirement Plan

After living and being a salaried employee for a long time, there comes a point in life when people should start considering retirement planning. It is said, “The earlier you start, the better it is.” Because when you start saving for your retirement early in your life, you have the chance to build a significant corpus to help you through your golden days of life when you decide to stop working. A lot of people start their retirement planning by buying the best retirement plan. However, you must consider taking a few steps to ensure that you have everything needed to enjoy a stable retirement lifestyle in the next 10 years or so.

5 Simple Steps for Creating the Perfect Retirement Plan

Let us start from the start. There’s always a plan and strategy behind choosing the best retirement and pension plan. Follow these steps for the perfect retirement plan you are looking for:

1. Make your portfolio well-diversified and invest for the long term

Although it may be tempting to avoid stocks to minimize risk, the potential for growth that stocks may offer is still relevant at this stage of life. Consider keeping a well-balanced portfolio of stocks, bonds, mutual funds, and other investments that meets the risk appetite, investing time frame, and liquidity requirements.

Furthermore, reviewing your revenue sources well in advance of retirement allows you to make the required adjustments to your plans. A well-balanced portfolio will help you survive market downturns and earn the kind of income you'll need to pay costs throughout a retirement that may last for long.

2. Debt reduction is essential

Consider making extra mortgage contributions so that you can pay off your debt before you retire. Paying cash for big transactions will help you avoid incurring new credit card debt. You will reduce the amount of retirement income spent on interest costs by minimizing new debt and reducing current debt.

Surprisingly, paying off a credit card with a 15% interest rate is almost equivalent to earning 15% on a risk-free deposit. You must take a hard look at things to make an effort to get out of debt.

3. Prepare a budget for all retirement income and expenditures

Calculate your predictable revenue from different sources, such as pension from your boss. The majority of your retirement income will most likely come from your salary, pension, and investment accounts, as well as any benefits received after you retire.

Some costs, such as health insurance, may increase as you get older, while others, such as transportation and expenditure on clothes, may decrease. How much you pay in retirement can be determined by how you live. If you want to fly extensively, the estimated expenses will be much greater today when you are still working.

4. Take into account future medical expenses

If you retire at 65 or older, you may want to start purchasing insurance to help offset your non-routine healthcare costs, which are expected to escalate as you age. At an elderly age, ailments and diseases are very common. Therefore, people must have routine medical checkups at hospitals with their physicians and have a health plan with insurance cover.

Learn how to plan for medical expenses during retirement.

Canara HSBC Oriental Bank of Commerce Life Insurance customers can choose from various policies tailored to their specific preferences and conditions.

Try purchasing a long-term care policy to help secure your retirement savings by covering costs such as home health aides. Your premiums will be cheaper if you purchase policies now rather than waiting a few years, and you will be less likely to be turned down by insurers.

Try contributing the full amount to a health savings account if you have one. The money is tax-free, but it can be liable to income tax and fines if it is not spent for eligible medical purposes.

5. Make plans for where you will live

Your retirement location will have a significant effect on your costs. For example, suppose you sell your house in a high-cost area and relocate to a condo in a low-tax state. In that case, your expenditures can drop dramatically, potentially freeing up money for other purposes.

You might still imagine living in your current town or city but downsizing to a more affordable house. On the other hand, you may choose to live in an area with high expenses and taxes to be near your grandchildren, or you may choose to relocate somewhere you can cut down extra costs.

Learn how to plan for your dream vacation house at retirement?

How & What to Figure out Before Taking any Step Towards Retirement?

Begin by visualizing the kind of retirement you desire. Are you planning to work part-time, volunteer, or travel? After that, create a concrete view of the financial tools you'll need or see if the existing ones will be enough to carry out your retirement smoothly.

Perfect Retirement Plan | Best Pension & Retirement Plan

Consider how you can acquire the additional assets you need or change your current situation in a way that fills the void and suits your finances. You will recognize luxury products that should be omitted or minimized by reviewing the current expenses.

You may be shocked at how much you would save if you look at what you bought in a month and cut down on that.

It is Never Too Late to Begin

It's easy to forget about your retirement plans. Considering the busy and hectic lives people lead these days, it is no surprise that retirement planning can slip out of our minds.

However, it's important to schedule ahead of time and set realistic goals for retirement so you can enjoy the retirement life you've always hoped for.

It is always best to figure out all your investments, insurance policies, pension plans you want to take up, and any recurring medical expenditure. Once a retirement plan is in place, an individual can relax as everything is planned.

If you started saving and investing for retirement late or are yet to do so, there are steps you should take to boost your retirement savings. It is never too late to start planning.

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Frequently Asked Questions (FAQs) for Retirement and Pension Plans

The premium is one of the most important factors to consider before buying a policy. Many people buy a life insurance policy with a high sum assured but are unable to process the premiums for the entire premium payment tenure. You can get a better idea of the premium outgo with the Premium calculator available in the ‘Tools and Calculator’ section of

The Invest 4G plan offers three benefit options to choose from. If you have opted for the Life Option or Whole Life Option, the insurer will pay the nominee(s) death benefit if the policyholder meets with an unfortunate incident. However, in the Life Option with Premium Funding, the policy continues even after the death of the policyholder. The company pays the remaining premiums until the policy matures.

Life is unpredictable and so it is important to prepare for all eventualities. If you regularly save a substantial amount of your income for retirement, the corpus may expand to a comfortable level before retirement. In case you become disabled and are unable to contribute to the retirement plans, most plans will continue to multiply your savings. The amount already accumulated will continue to grow and besides the existing plans you can also choose to invest in pension schemes specifically designed for people with disability.

Investment in ULIPs like Invest 4G plan qualifies for tax deductions under section 80C of the income tax law. The maturity benefits of ULIPs are also tax-exempt under section 10 (10D) of the Income Tax Act, 1961. However, if the premium paid during the policy term is more than 10% of the sum assured, the maturity proceeds will be taxable.

The concept of early retirement is catching up fast in India, but there are no specified ages for early retirement. While in some western countries the age between 35 and 45 is considered favourable for early retirement, in India the ideal age is 45-50 years. With the right planning and investments, it is not very difficult to retire early.

At the age of 35-40, people generally have several responsibilities such as children’s education and various EMIs. It is difficult to spare a substantial amount of income for retirement. Depending upon the needs of the household and the lifestyle, one should aim to save around 40-50% of his/her income. Around 10% of the income should exclusively be allocated for retirement planning. Here are some tips to choose the best retirement plan.

  • Focus on your needs: It is easier to formulate a strategy when the goal is clear. Make an estimate of the amount required to sustain your life. Take inflation into account and zero in on the targeted corpus.
  • Research thoroughly: Conduct thorough research before investing in any financial product. Read the term and conditions properly and try to understand how an investment product fits your needs.
  • Consider different products: The market is awash with all kinds of investment products. Do not follow conventional advice as the need of every person is different. Take into consideration all the suitable products, conduct an objective analysis and then invest.

Owning a house is a cherished dream for many. There are several ways to save for a new house, but in urgent cases, people may be tempted to withdraw from their retirement fund. There are various financial products for retirement planning, and all have different withdrawal rules. In the case of the National Pension Scheme, partial withdrawals for special purposes like buying a house are allowed only thrice during the policy tenure. However, to avail the withdrawal facility, you should be an NPS investor for at least 10 years and you are permitted to withdraw only 25% of your contribution. If you have a PPF account, you can withdraw 50% of the accumulated amount, but only after staying invested for at least 6 years. The Invest 4G plan also allows partial withdrawals after five years of investment.

The quantum of monthly savings depends on the specific needs of the buyer. Financial advisors, however, suggest people save around 15% of the monthly income for retirement.

Retirement plans such as NPS have a very low entry threshold. It is also open to all and anyone can open an NPS account and start saving. A small business can also invest in Invest 4G plan from Canara HSBC Oriental Bank of Commerce for as low as Rs 5000 every month.

The choice between paying off a student loan or start a retirement account is not a difficult one. Starting early for retirement planning has its own advantages but extending the student loan will increase the interest burden. You will have to find a balance between the two. Try to pay off the student loan as soon as possible, but do not hold back on investing in a retirement account.

Most people nominate their spouse to receive retirement benefits in their absence. But a spouse is not automatically entitled to be the beneficiary of a retirement account owned by the other spouse.

Gold is a safe investment asset and investors often flock to the yellow metal to stabilise their portfolios. Holding a small quantity of gold can be considered as the intrinsic value of gold remains intact. You can also choose to have an exposure to gold through ULIPs. ULIP funds invest in a variety of asset classes and some fund options also have a small exposure to gold. You can choose fund options with gold to have a small and indirect investment in gold.

While there are no explicit rules barring the use of retirement account to finance real estate, it may not be advisable to do so. For instance, you are allowed to avail loan from the PPF account from the third financial year. The loan can be used to finance real estate, but it would defeat the purpose of having a dedicated retirement account.

While there are no explicit rules barring the use of retirement account to finance real estate, it may not be advisable to do so. For instance, you are allowed to avail loan from the PPF account from the third financial year. The loan can be used to finance real estate, but it would defeat the purpose of having a dedicated retirement account.

The government has allowed all central government pensioners to open a joint account with their spouses.

Vesting date or age signifies when your pension plan’s accumulation phase is over and the distribution phase can begin. For example, in a deferred annuity plan, you may have a vesting date which is 10 to 30 years away depending on your age at entry. You will continue to invest or stay invested till the vesting date. After the vesting date or age, you can start receiving the pension or withdraw the money from the plan.

The steps may differ from plan to plan. However, you can buy the online retirement plans following the steps below:

  • Retirement Calculator: Use a retirement calculator to estimate your corpus need and expected monthly investment amount to achieve it
  • Choose Plan: Select the online retirement plan you want to start investing in
  • Contact Information: Fill in the personal details including the contact information. Make sure to put the correct e-mail ID which you can access since all future communication about the policy will take place via e-mail.
  • Define Your Investment: Select the goal, investment term, investment frequency and amount you want to invest (based on the calculator estimate)
  • Select Fund Allocation: Online retirement plans give you the option to invest in multiple assets including equity funds. You can select the ratio in which your premium will be allocated to these funds as per your risk appetite. Then select one of the portfolio rebalancing strategies.
  • Select Withdrawal Plan: You can withdraw money based on set milestone or systematically from the plan after the lock-in period. Select the options for withdrawal as per your plan.
  • Review Plan & Investment Details & Complete the Application Form

You can pay the premium amount before or after completing the application form to start investing.

The best time to plan your retirement is when you are planning your career. However, this may not be the time when you really start investing money for your retirement. You must start investing in your retirement plan as soon as you start earning.

Retirement is the only financial goal you cannot repair with other means of funding like a loan. Thus, developing the habit of investing with every income you have is the best way to have a comfortable retired life.

Insurance allows your family, especially your dependent spouse to continue living without financial worries if anything happens to you. Also, insurance may help you save enough for retirement in case of permanent disabilities. Additionally, life insurance retirement plans allow you to build a good retirement corpus with bonus additions.

Yes, you can change the nominee of the policy anytime you need. If you are using an Electronic Insurance Account (EIA) to manage your policies, you can change the nominees anytime from this account. Otherwise, you can contact the customer care to update the nominations on your policy.

You can opt for auto-debit of the premiums from your savings account. You can also pay the premiums online using your debit card, credit card or a payment wallet.

You can get Rs. 1 Core pension plan using the online retirement calculator. The calculator will assess your eligibility and provide you with the probable monthly or annual investment to achieve the goal. If the amount seems feasible you can complete the purchase online or set an appointment for a qualified advisor to help you in the process.

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