Retirement Planning ? Build a secured nest for your golden days

Posted by ankita on March 31st, 2017

One of the key concerns that working people have is the availability of adequate income to meet their lifestyle needs and financial requirements once they age and retire. This concern gets aggravated with the rising medical costs, nuclear family structure and  creeping inflation costs in the later years.

Therefore, a person must eye on a sound retirement plan to invest his or her financial resources for earning good returns.

Many people desire to retire from their work life at an early age to enjoy the fruits of their active adult life. But all this is possible if you have sufficient financial resources.  While markets are pooled with various retirement plans, the market-linked insurance plans offered by insurance firms are the most trending ones. These are dual benefit plans under which a part of your premium goes for life cover and the remaining gets invested in market-linked funds such as equity, debt or balanced funds.

Planning smartly and preparing for the challenges both financially and mentally will help you reduce stress when you retire. Before choosing your retirement plan, identify the activities that you wished to carry out. It could be going on a foreign vacation, building a house, starting up a small firm or restaurant, etc. The next would be creating a financial back up to take care of responsibilities in life such as child education and marriage, leaving corpus for spouse medical and survival needs.

Once you come to a suitable consensus of your financial needs, you can compare the policy structure, the earning benefits, charges incurred on maintenance and other factors.  You can sit with the financial expert to decide on the fund choice and the allocation amount. If you believe in taking a risk you can opt for equity funds, generate profits and move them to safer debt-oriented funds.  A risk-averse player can park his or her money in debt-oriented funds to generate safer earnings. 

Firstly, these funds invest in a diversified set of funds leading to possible balanced risk-adjusted returns. These funds are for a longer horizon of investment period leading to a reduction in volatility risks. It reduces the risks associated with equity investments. Retirement plans can also help you save taxes under section 80C of the Income Tax Act, 1961.

One of the significant aspects of the practical approach to the retirement plan is to look at different options of market-linked funds, especially if you lack either the time or the expertise to manage direct investments. Early investments will help you enjoy the benefits of compounding effects.

Since retirement plans are long-term investment tools, you can work upon the fund allocation carefully to generate the desired corpus over the years. Regular monitoring of the funds is a must for better gains. Also, try to curb the charges incurred on fund performance and maintenance, so that they don’t eat up your profits in the long run. 

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