Things to avoid while Planning Retirement

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