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7 Factors to Consider Choosing the Best Retirement Saving Plan

dateKnowledge Centre Team dateFebruary 19, 2021 views135 Views
7 Factors to Consider Choosing the Best Retirement Saving Plan

Retirement planning plays a very significant role in an individual's financial planning. It is imperative to save enough funds for your future to look after the needs of your family without being dependent on anyone post your retirement. After retirement, if you do not hold any savings or investments, it will become difficult to sustain your lifestyle.

Even if you are saving money for your future in a bank account, the inflation rate might reduce the sum and the worth. Hence, it becomes extremely important to identify and choose the appropriate retirement plan that can help in increasing your corpus without fretting about the fluctuating inflation rate.

7 Factors to Consider while choosing the best retirement saving schemes

With an improvement in the escalating expense of living, healthcare, and life expectancy, planning for retirement has become a must and should be worked upon on priority. Here are a few ways in which you can choose the most suitable retirement saving schemes.

1. The inflation rate should be less than ROI

Retirement planning can be considered as a long-term monetary goal. When investing for the long term, many people face a major challenge of protecting the amount invested from capital erosion due to the fluctuating inflation rates. This inflation can sometimes act adversely on the value of your corpus and long term investment. Hence, it is very important to note that your return on investment (ROI) should always be higher than the rate of inflation.

2. Look for adequate retirement pension

While choosing a retirement pension plan, you must keep in mind that you receive adequate pension income post your retirement that will be sufficient for you and your family. Furthermore, you must choose a plan that can provide financial cover to your loved ones even after your demise. Another important point to be noted is to ensure that the amount is sufficient enough to meet your expenses after various tax deductions.

3. Mitigate risk and secure assured return

A person can take some risk to enhance their portfolio. However, as you start growing old and approach your near future, you must try and moderate the risk factor and look for plans that assure you secured returns. In the last few years before retirement, it is important to stick to guaranteed return on investment and low-risk corpus to fight the increasing market volatility.

4. Vesting period

You must always opt for the retirement savings plan for the vesting period that matches your requirements and needs. There are numerous pension saving schemes that people can opt for once they reach the age of 40 that can streamline the income, and people can be secured from an early age, while some plans can also opt at the age of 60 if you plan late for retirement.

5. An appropriate annuity alternative

You must choose a pension plan with the annuity alternative that is most appropriate for you. For instance, some lifetime retirement savings plan alternative assures annuity for a specified number of years whether the assured person survives or not. On the other hand, certain savings plans assure annuity to the nominees of the assured person after their demise.

6. Expenses

People must always go for alternatives where expenditures or charges are extremely economical. You must discern that the more capital you spend on expenses on taking a savings plan, the less you will preserve towards retirement. This is the reason why you must always compare all the savings plans available and then make an informed decision.

7. Take the help of a financial planner

Planning for retirement is a serious business, and a person must earnestly plan for his retirement if required. People can also take the help of a financial planner who can assist them at every step and guide them in choosing the best saving plan and also its complete execution process.

Irrespective of whichever retirement and pension plan you choose, it is always advisable that you must start investing at an early age. If you start saving funds for your retirement at an early age, you can receive a substantial amount of money once you reach your retirement phase. You can further take advantage of compounding when you start investing early.

If you intend to invest and plan for your retirement, it is advised that you must not hold it. Retirement planning should be taken into consideration earnestly by every person as by investing in a retirement saving plan; they can lead a hassle-free and financially independent life post their retirement. These days there are numerous alternatives to a retirement saving scheme. Therefore, it is smart to make a rational and informed selection.

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Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

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  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
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