Consistent income:
You won't have a steady income after retirement, but your expenses are going to stay pretty much the same. Having a pension plan will provide a steady cash flow for your expenses.
Manage Inflation:
If you plan to rely only on your savings for your retirement, then inflation and rising cost of living could eat into your savings before you know it. You could run out of your savings sooner than the shelf life of your current budget due to inflation. A pension plan can grow your money to beat inflation and increase the value of your invested money applying the power of compounding. Pension plans offered by Life Insurance companies have an appropriate asset allocation to include equity assets to help you beat inflation over time.
Retirement dreams:
Retirement is probably the only time in your life when time won’t equal money, which means you will have a lot of free time to do everything you ever wanted to. Most people intend to travel, spend time developing hobbies, etc., but these things take money. And the only way to afford them is if you have the cash flow to spend on these goals.
Self-reliant:
Retirement years are ideally spent with your family, kids, and grandkids. However, not having a retirement plan could burden them with your living and medical expenses. The only way to be financially secure and self-reliant is optimal financial planning.
Considering these as the primary reasons, it is essential to invest in a reliable pension plan that will cover all your expenses, needs, and wants in your senior years. Now that you know the 'why' of retirement planning, let's discuss the 'how.'
How and How Much to Provision For:
First, you need to know how much money you will need when you retire. There are several ways to find that out, but your best bet is a
retirement calculator.
Here’s how we can simplify it. Let's assume you are 35 years old and want to retire at 60 and want to provision for your expenses until you are 80 years old. Consider your monthly expenses are Rs. 35,000 now, then post-retirement in 30 years, your monthly expenses would be approximately Rs. 1,50,000, or you will need a corpus of Rs. 3 Cr. to live comfortably until you are 80 years old.
Now that we have arrived at the how much let us figure out how you can reach that goal. You need to start investing in a
retirement plan or a
pension plan right away and secure your financial future. Choose the
best retirement plan in India, which should ideally give you an ROI of at least 10%, and you can comfortably achieve your goal.
Here is a sample investment if a 30-year-old invests 10k every month for the next 25 years. For that, lets assume:
