Retirement planning is a very important part of anyone’s investment portfolio. Like all other investment strategies, it can be a double-edged sword if not approached with proper care and certain foresight.
However, many Indians fail to prepare for their retirement. Insufficient income, lack of organized savings and insurance, and lack of knowledge about financial products and services can lead to an uneventful retirement.
It is important to understand the options available and devise a suitable plan so that your post-retirement years will be bright and peaceful. With that said, let’s take a look at what is retirement plan and who needs it.
What Is a Retirement Plan?
A retirement plan, also called a pension plan, is an investment vehicle designed to provide security in the later years. It allows you to handle the uncertainties post-retirement and ensure a steady flow of income after retirement.
Even if you already have a lot of savings, you still need a retirement plan to ensure a safer and more secure future. In a pension plan, the insured needs to contribute a specific amount regularly until the time of retirement.
The accumulated amount is given back to the insured as a pension or annuity at regular intervals of time. Whether it be long-term or short-term, investing in retirement plans is the best way to secure your financial future as it enables you to deal with emergencies.
4 Reasons You Need a Retirement Plan
1: You Want to Gain from Compounding
Compounding invokes a passive income stream by reinvesting dividends or interest. In retirement plans, you get to earn interest on your interest. The more time you give to compounding, the better the outcome will be. Given adequate time, your investments will grow larger.
2: You Need a Scalable Investment Plan with Insurance
A retirement plan combines an investment plus an insurance plan, designed to meet the post-retirement financial needs. A pension plan can be either traditional or unit-linked, depending on your requirements and preferences.
Keep in mind that while investing in a retirement plan, it’s important to know how much risk you’re able and willing to take on. A person with a low-risk tolerance might choose a conservative plan. A more aggressive investor can choose a balanced plan, while a person with a high-risk tolerance can invest in an aggressive plan.
3: You’re Looking to Safeguard Your Loved Ones
There are multiple benefits of investing in a retirement fund, the most important ones being its ability to help you generate additional income and protect you against the risk of having insufficient resources when you’re no longer working.
What’s more, it also pays out a death benefit in the event of your unfortunate demise to your chosen nominee. This allows your loved ones to manage their day-to-day expenses without having to depend on anyone in your absence.
4: You Look Forward to Adopting the Habit of Savings
Retirement plans are intended to help you accumulate a large enough post-retirement income that will last for the rest of your life, and is meant to provide income that can be used for any purpose like fulfilling your goals and aspirations.
Allocating a portion of your savings to long-term investments allows you to accumulate wealth without putting too much strain on your monthly expenses. The earlier you start investing in these long-term plans, the more money you accumulate over time.
Best Retirement Plans Available in India
1: Canara HSBC Oriental Bank Of Commerce Pension4Life Plan
Canara HSBC Oriental Bank of Commerce offers a smart way to ensure a regular guaranteed income stream as per your needs post-retirement. is an annuity product where buyers receive payments over time in exchange for the purchase price.
The plan allows you to choose from a wide range of annuity options and credits the guaranteed income straight to your bank account as per your requirements. With this plan, you can choose to earn regular payments as long as you are alive.
In the event of your unfortunate demise, the policy returns the purchase price to your nominee. Moreover, you can even enjoy flexibility in terms of annuity instalment frequency with options like yearly, half-yearly, monthly, or quarterly.
2: Aditya Birla Sun Life Insurance Empower Pension Plan
Aditya Birla Sun Life Insurance Empower Pension Plan is a straightforward, uncomplicated, and easily accessible pension plan that enables you to convert your premiums into a sizable return when it comes time for your retirement.
In this plan, the value of your investment is determined by the fund to which you contribute and also by the price of the fund. The insurer also guarantees additions to your account in the form of units to help you boost your retirement corpus even more.
In the unfortunate event you die while this insurance is in effect, the policy also agrees to pay to your nominee the death benefit or the value of the fund, whichever is greater.
3: AEGON Life Guaranteed Income Advantage Insurance Plan
Aegon Life Guaranteed Income Advantage Insurance plan is a plan that provides guaranteed life cover until the age of 85 to provide for a comfortable life even after retirement. The plan offers guaranteed bonuses at the end of the policy term, as well as guaranteed annual pay-outs up to the age of 85 years.
Moreover, the bonuses declared during the premium payment terms will be paid to the policyholder at the maturity of the policy or in the event of death.
Many of us don’t think about our retirement until we are deep into it. In this article, we have provided a brief introduction to what is retirement plan and why it will be important for you down the road. Choosing the right retirement plan is an important decision and one that will play a significant role in your financial future. If you’re not sure what type of retirement plan to choose, make sure you check out our recommendations above.