Most people spend a significant part of their adult life worrying about their future and that of their loved ones. These worries cannot be taken away entirely but can be minimised through the right financial planning. One of the vital aspects of the entirety of your financial planning should be retirement planning. It can help you ensure that your life after you retire is as comfortable as you want it to be.
What is a Retirement Plan?
Put simply, a retirement plan is the ideation and execution of measures to ensure that your life after you retire is not financially fraught. Economic difficulties can directly affect several areas of life. Especially after retirement, when you may not be earning a regular income, not having a retirement plan in place can leave you in a lurch.
Many assume that planning for retirement is a difficult, uphill task. However, if done right, it is not as difficult as some assume it to be. It is recommended that you start taking small steps towards creating your retirement plan as soon as you start earning.
You can start by finding the right pension policy for you and contributing some money towards it regularly. Even if you start small, over time, it should grow big enough to help you through your post-retirement phase.
If you have not started a pension plan in the initial phase of your career, you may choose an annuity plan as you inch closer to retirement. In addition to making arrangements for a regular income, you should also get the right kind of insurance to help bolster your financial security measures. For example, you may get a health plan for yourself as well as your partner, and a life cover to ensure security for a survivor.
Types of Policies to Include in a Retirement Plan
Your retirement plan may look very different from someone else’s. Ensure that you take your needs, means, and goals into consideration when planning for your retirement. There are online pension calculators available in India to help you with this.
Here are a few plan options that you may like to make a part of your retirement planning.
- Annuity Plans
Annuity plans are policies offered by insurance providers for customers who would like to ensure a regular income after retirement but have not opted for a pension scheme. Depending on the type of plan you choose, you may start receiving your annuities within the year, or after a few years.
Unit-linked Insurance Plans are used to fulfil several goals other than retirement but can work as a part of your retirement plan as well. Unlike a traditional pension policy, ULIPs will offer market-linked earnings and lump sum returns upon maturity. Furthermore, these plans will also offer a life cover alongside the wealth creation aspect.
- Life Insurance
If you are not willing to put your money in market-linked plans such as ULIPs to get the life cover benefit, it is advisable to buy a separate life insurance policy. It should help you secure the future of your dependents. Term insurance plans are one of the most affordable plans but may not offer a lifelong cover. Whole life plans or endowment plans are some of the options you may look at.
- Health Insurance
Your regular income through pension plans or annuities will take care of your routine expenses. However, medical expenses tend to increase as one grows older. Thus, it is ideal to have a health plan for yourself as well as your partner. These are four of the several policy types you may include in your retirement plan. Before you buy a plan, ensure that it aligns with your goals. With the right plans and consistent savings, start your retirement planning today.