What is retirement? Well, retirement is that
phase of life when you have touched 60 years of age, you are old with
grandchildren running around the house and have successfully relieved yourself
from employment. Such a phase is also accompanied by multiple retirement plans.
Speaking of retirement plans, there has been a
surge in purchasing of such policies among younger millennials. The reason for
selecting different retirement plans is that millennials not only want to
secure their life post retirement, but also have adequate savings for their
family’s financial needs.
Given the rising number of insurers, there are
multiple retirement plans to choose form. To make things easier, we have
decided to create a list of things which you need to avoid while planning for
your retirement. Also, we will shed some light on the best money back policy in
India.
Planning
Without Action - Everyone plans to retire early, from
the age group of 20|25|50| to 30|35|45 years, all are interested in finding a
suitable retirement plan. The only problem is that it remains in the stage of
planning and does not go forward. To keep things in motion, you need to
allocate and invest at least 20%-30% of your salary every month in a retirement
plan.
Holding
Multiple Policies - There is no need to buy multiple retirement plans or policies. Holding many
policies will not help you retire peacefully, in fact, it will make the process
of claim settlement hectic and panic worthy. What you need to do is act smart
by investing in different types of retirement plans such as a combination of
life insurance/term insurance/health cover/endowment plan/money back policy, so
that all the old age life crises are met easily.
Life
Expectancy - The sum assured is often a lucrative
amount at the time of purchasing the policy and paying those annual premiums.
What you need to take into account is your life expectancy, what if you live
throughout the policy tenure and the sum assured was not adequate? So select
your retirement plan wisely.
Inflation
- Inflation depreciates the value of money over time;
what is affordable today will not be affordable in the future. You need to take
into account the impact of inflation on your investment and insurance cover.
Calculate your future corpus while adjusting the rate of inflation
simultaneously.
Forget
About Saving - You need to understand the functioning
of a retirement plan. The earlier you begin investing, the higher the corpus.
Investing ₹5000 at an age of 20 will give you close to ₹15 crore @15% return,
while the same investment at the age of 40 will entitle you only to ₹3.5 crore
at the age of 60 years.
Choice
of Investment - Do not invest in gold and property for
a short investment horizon as you cannot predict market volatility. These
assets do not guarantee a double of investment at maturity, neither do they
guarantee any over and above market related returns.
Employee
Provident Fund - This is one thing that you should not
touch at all till the time of maturity or retirement. This is something which
will give you social security in case you do not have anything in hand during
retirement. Such investments are bound to double over a long tenure due to the
power of compounding.
Clear
All Debts - When you are young, you are bound to take
loans for personal purposes. During mid-life, you will probably take a loan for
household purposes. The latter part of your life will comprise of loans taken
for your children’s education or their marriage. It is important that you clear
all of these loans before retirement as the last thing you want is to pay off
your debts with your retirement money.
Health
Insurance - As mentioned before, you need to have a
combination of multiple policies in hand and one of the must haves is a health
insurance. Given the rising cost of medical bills and modern medicine, a health
insurance is an absolute requirement for your retirement planning. Do not miss
out on this one! Buy a health insurance policy or mediclaim as soon as
possible.
Post
Retirement Investment - Your investment pattern does
not have to end on reaching retirement. The corpus that you have collected via
your policies can be put to good use. There are multiple senior citizen schemes
provided by banks and financial institutions which can be availed for
investment. In case you need extra cash to pursue some hobby or start your own
business during those retirement years, investment in the right kind of fund
will definitely come in handy.
Best
Money Back Policy in India
As the name suggests, a best money back policy in India is
an insurance cum savings plan. Under this plan, you get the benefits of
insurance as well as money back at regular intervals. The primary objective of
purchasing a money back plan is that it provides regular income at a specified
rate as per the course of the policy tenure. This enables a policyholder to
have a steady flow of income over the term of the policy or during retirement.
|
Plan
|
Tenure of the Policy
|
Min Sum Assured
|
|
LIC Money Back Policy
|
20 years
|
₹100,000
|
|
Bajaj Allianz Cash Assure
|
16|20|24|28 years
|
₹100,000
|
|
LIC Money Back Policy for Children’s
|
25 years
|
₹100,000
|
|
Reliance Super Money Back Plan
|
10|20|30|40|50 years
|
₹100,000
|
|
Birla Sun Life Insurance Bachat Money Back Plan
|
20 years
|
180X your monthly base premium
|
