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 retire later or early, your retirement plan should be in place.
Retirement planning can be a plan-of-action to help you achieve your post-retirement goals like traveling, pursuing a new hobby, starting a business venture, and so forth. Since it a long process, you should plan it appropriately with a lot of thought. Moreover, it should consist of your savings and investments to meet your dreams faster after retirement. Therefore, you should purchase a retirement investment plan to provide you with a regular retirement income.
Since there are several pension plans in the market, you might be overwhelmed with the choices and fail to select the right one for you. 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. During your active working years, you might not think of retiring right away. Since you would have a lot of time in hand before retirement, you can build a substantial corpus when you invest in a pension plan early.
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
At a young age, you might be an aggressive investor 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 your retirement age, you should shift to debt funds since they are less risky. That way, you would be able to 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 would eventually stop. Since you might depend on your pension plans to receive income, 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 age. Look for a pension plan, which can offer you a pension early at the age of 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, which allows 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, to ensure you live a financially secure life even after retirement, you should consult a financial expert. A professional can guide you through the retirement planning process and ensure you choose a plan to generate the appropriate retirement income.