Retirement Corpus :The trend of post-retirement life in India is changing dramatically. Gone are the days when retirement meant living a peaceful life with limited needs. Today’s thinking has changed and many people dream of a great life after retirement. For example, traveling to places of their choice, fulfilling all their hobbies and being socially active. However, this dream can be fulfilled only if you plan carefully and invest in a disciplined manner.
Healthcare is constantly progressing and people now prefer a healthy lifestyle, which is increasing the chances of people living longer. In view of this, proper financial planning has become very important so that any kind of financial trouble after retirement can be avoided.
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First decide how much corpus you should have at retirement?
For example, if you need Rs 1 lakh per month (Rs 12 lakh per year) to live comfortably after retirement and you expect to live for 15 years after the age of 60, you will need a total of Rs 1.8 crore (Rs 12 lakh x 15). If you live till 85 years, you will need Rs 3 crore. So…
1. Build a large retirement fund: For this, save and invest regularly.
2. Use financial instruments: Use better financial instruments to grow your retirement fund. Securing adequate life insurance and health cover is essential for the success of every financial plan.
3. Tax benefits: Choose tax-friendly options.
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Why timely retirement planning is important
1. A prosperous retirement life
2. Medical bills are increasing year after year
3. Income source is important even after retirement
4. It is important to become financially independent
5. Increase in life expectancy
Apart from this, there are 2 other factors which point towards the importance of timely retirement planning….
6. Option for early retirement
Many people may not have the enthusiasm to work till the age of 60. Today’s youth want to retire at a young age. They want to start their own business in time. A survey conducted last year showed that 67 percent of Indians are considering early retirement, with some limiting it to the age of 33.
7. Emergency situation can be controlled
Emergency situations can happen to anyone for no reason. A retirement fund will ensure that the situation can be resolved quickly and reliably.
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How life insurance will help
Regular income after retirement: These plans can be suitable for people from any income group as they convert the savings in the form of premiums into regular lifetime income. In addition, most retirement plans offer bonuses as well as loyalty additions to boost the retirement fund corpus.
low risk : The retirement phase is different from the working years. The risk appetite reduces and people start looking for safe investments that also meet their financial goals. With a carefully created savings pool, it is most important to use the funds wisely to cover all your expenses without losing money to market volatility.
Discipline : Starting investing early is always the best option and the same holds true for retirement planning. Along with starting early, it is best to be disciplined when it comes to premium payments. This will ensure that you are assured of a steady flow of wealth in the golden years of retirement, eliminating the stress that comes with fluctuating market rates.
Saving on taxes: Life insurance plans offer various tax benefits under Section 10 (10D) and Section 80C of the Income Tax Act, 1961. These benefits can help make the most of retirement savings and also reduce the tax output significantly.
(Author: Vivek Prakash, Chief Distributor Officer (CDO) for Proprietary Channels, Kotak Mahindra Life Insurance Company Limited)
