Retirement can be the beginning of the golden years of life. However, retirement might not be about age anymore. Gone are the days when Indians would prefer to retire at the usual age of 65 years. According to a survey, over 64% of the Indian population aged 45 might wish to retire in the next five years. Whether you want to bed later or early, your retirement plan should be in place.
Retirement planning can help you achieve your post-retirement goals, like traveling, pursuing a new hobby, starting a business venture, etc. Since it is a long process, you should plan it appropriately with much thought. Moreover, it should include savings and investments to meet your dreams faster after retirement. Therefore, you should purchase a retirement investment plan for a regular retirement income.
Since several pension plans are in the market, you might be overwhelmed with the choices and fail to select the right one. Therefore, let’s go through the top seven tips on how to choose the right pension plan for you:
Start at a young age.
Although there is no right time to buy a pension plan, you should purchase it early to reap maximum benefits. You might not think of retiring right away during your active working years. Since you would have a lot of time before retirement, you can build a substantial corpus when you invest in a pension plan early.
Invest inequities
When you are young, you might have minimal financial responsibilities for your family since you might not be the family’s breadwinner. Due to fewer financial responsibilities, you can afford to bear the market risks. Therefore, you should invest in equities to receive higher gains on your investments at a young age.
Diversify your portfolio
You might be an aggressive investor at a young age due to your high-risk appetite. However, you might not be able to bear risks once your financial dependents increase as you grow older. When you reach retirement age, you should shift to debt funds since they are less risky. That way, you could diversify your investment portfolio and secure your assets from market volatility.
Choose a high sum assured value.
After you retire, the flow of your professional income will eventually stop. Since you might depend on your pension plans to receive payment, you should select a high sum assured value. However, consider your financial requirements and investment goals before choosing the sum assured amount.
Consider the vesting age.
Many pension plans might offer a pre-determined vesting age. A vesting age is typically the age that allows you to receive your pension. Before purchasing a pension plan, you should check with your insurer about the vesting period. Look for a pension plan that can offer you a retirement early at 40.
Purchase an annuity plan.
Many pension plans can allow you to convert your retirement corpus into an annuity. A unit-linked pension plan can allow you to purchase an annuity plan after the maturity period. Therefore, select a pension plan enabling you to transfer your money into an annuity after a specific period.
To sum up, retirement planning can be a serious business since it is a long-term commitment. Therefore, you should consult a financial expert to ensure you live a financially secure life even after retirement. A professional can guide you through the retirement planning and ensure you choose a plan to generate the appropriate retirement income.
