Planning retirement is an exceptionally promising idea and important too for a hassle-free retirement. The early you invest, the more time you get to maximize your investment and earn higher returns on investment. It is noticed that a good percentage of the people in their twenties do not take investment seriously and think about planning retirement.
What is Early Retirement Planning?
If you are planning to google the answer to the question – What is early retirement planning? If you are unable to make the right investment decision, read the article for better planning and understanding of early retirement planning. No matter whether you run a business or work as a professional, retiring with a good corpus is desired by all. Enjoying retirement is possible. It is all about how well you plan your finances, and goals in life and manages your funds.
If you find it difficult to choose the right retirement plans or your financial goals, you can seek assistance from financial experts. Time and tide wait for none. With every passing day, we grow older and in the old days we become more dependable. So, one should start saving as early as possible. Your early retirement planning can help you retire rich and enjoy your retirement.
Why retirement planning is important in India?
Retirement is the concern of people across the globe. This question – Why retirement planning is important in India? is not only related to Indians but for the citizens living in different parts of the world. At many times in life, you do not find people to support. Even your own relatives and children run away from the responsibilities of taking care of parents. It is your savings or the accumulated funds that will help you enjoy independent life during your golden days (old age days) without being dependent on others. The retirement planning will help you prevent becoming a financial burden on your children, lessen the burden of your medical expenses, and other unexpected expenses required to be invested in your wellness.
Unlike a few developed countries, the facilities for the old age or senior citizens in India are inadequate. The conditions of the old age people from financially weaker sections of the society are pitiful. Also, due to the nuclear family mindset, life has become more struggling. Also, there are many reasons that make retirement planning important in India unlike many other countries.
Tips and tricks for early retirement planning
Systematic planning is the prime and important requirement to have adequate corpus for your sunset years. Experts suggest some tips and tricks for early retirement planning that can help make the best use of your savings. The more you save early, the better return you can expect.
Below are the 7 Tips and tricks for early retirement planning
1. Know Your requirements
After your retirement, the cash flow from your employment will stop. If you have no alternate income option planned well in advance, it will be very difficult to manage your daily and monthly expenses. The challenges can make your life struggling. You can have a clear picture in your mind if you are planning to live a simple life or a life surrounded with luxuries. Analyse your needs if required with the help of an expert. It will allow you to find the approximate corpus you require for your retirement.
2. Estimate your saving needs
Once you derive information about the corpus you need to fund your annual expenses during your sunset years, you can estimate your saving needs. The estimation will help you determine the amount you have to save to afford the expenses for your living during your retirement. There are many tips and tricks for early retirement planning that will help you keep your investment plannings on track.
3. Plan your budget
Keeping a predefined budget for different things you plan to do during your retirement is a good idea. For example, a monthly budget for recreation, wellness, transportation, holidays, etc. Some plans may require more funds like recreation. Hence, you can make a specific budget for recreation.
4. Get out of debt
Saving is a good thing and easy if you try to clear your outstanding debts as soon as possible. The less is the liability, the more you can invest in your retirement plans. Do not unnecessarily extend your loans like personal, housing loans, or car loans. You can take the benefit of balance transfer, low interest rate loans, and consolidate debts to get out of debt at the earliest.
5. Save and invest regularly
Investing is a good habit and if you are doing early retirement planning, investing regularly is essential. Investing your savings in an investment plan that offers good yield and safety of capital is a better option. Commence your savings with a small amount. Try to increase your savings gradually.
6. Smartly manage your portfolio
Managing your investment portfolio is also necessary. You can choose to invest in multiple investment instruments. Your portfolio should be a diversified portfolio with investment in products like mutual funds, real estate, bonds, fixed deposits, etc. For a better performance and higher yield, it is recommended to manage your portfolio actively. The more you take risks, the higher is the return. Transfer your investments in secure investment options as you move ahead towards your retirement period.
7. Plan your insurance policies
Medical expenses are a big concern and the need for it can arise at any point of time. A big medical bill can disturb your budget and affect your savings. Since life is uncertain, it is necessary to have risk cover in the form of life insurance, term insurance, and health insurance. Your investment in different insurance plans can help you manage medical expenses and cover the uncertainty in life.
Following the above tips and tricks can help an investor enjoy the result of the systematic planning.
The Early Retirement Insurance Plans in India
There are many insurance plans with distinctive features. You can choose from the early retirement plans in India for the maximum advantage. Make sure you opt for the plans with less premium and higher return on investment. The early retirement plans in India aim at making you retire from work not from your life. Choose the plans that can guarantee lifetime income for you.
You can select the pension plan from the various available categories
1. Deferred Annuity
2. Immediate Annuity
3. Life Annuity
4. National Pension Scheme (NPS)
5. Pension Funds
6. Whole Life ULIPs
7. Defined Benefit
8. Defined Contribution
9. Annuity Certain
10. Guaranteed Period Annuity
11. With Cover and Without Cover Pension Plans
Choosing the right plan is vital. Making haste in taking decisions can result in disappointment. Hence, make sure you learn in detail about the various plans before making your final decision to buy or invest in an early retirement plan available in India.
You can choose from the below few listed Early Retirement Plans in India provided by below-mentioned companies.
| Pension Plans | Sum Assured | Policy Term | Entry Age |
|---|---|---|---|
| Aegon Life Guaranteed Income Advantage Plan | Min- Rs.1 lakh Max- No upper limit | 85 years minus entry age | 20 years-55 years |
| LIC New Jeevan Akshay Pension Scheme | N/A | 30 years – 85 years | |
| Aviva Next Innings Pension Plan | N/A | 13,16 or 18 years | 42 years-60 years |
| Canara HSBC Invest 4G Whole Life | Age < 45 years – 10X Annualize Premium 0.5*Term*Annual Premium Age > = 45 years – 10X Annualize Premium 0.25*Term*Annual Premium | N/A | 18 years – 55 years |
| Aditya Birla Sunlife Empower Pension Plan | N/A | 5 years- 30 years | 25 years-70 years |
| LIC Jeevan Umang | 2,00,000 (min) | 100- entry age | 90 days completed |
Apart from the pension plans, you can choose to invest in fixed income securities known for its attractive features. You can get fixed income, predetermined interest and fixed intervals may be monthly, quarterly, half yearly or yearly. Also, the returns on your investment in bonds is relatively higher with the guarantee of capital protection backed by sovereign guarantee in government bonds.
There are many types of bonds that you can choose to invest in. You can also seek advice from experts at BondsIndia for the best bonds offering better yield.
Below are the popular types of bonds including
1. Government Bonds
2. PSU Bonds
3. Corporate Bonds
4. Tax-Free Bonds
5. Zero-Coupon Bonds
6. Convertible Bonds
7. Sovereign Gold Bonds
8. Perpetual Bonds
9. Green Bonds
10. Covered Bonds
11. Market-Linked Debentures