Retirement plans with life insurance: planning for your golden years

As long as you are working, your financial security is more or less ensured well. However, this becomes a crucial factor for concern after your retirement. However, this becomes no issue with deft planning from an early stage. 

The retirement period is a relaxation period that can be enjoyed to the fullest if you have a well-planned financial portfolio and take care of all your financial requirements during that phase. A well-executed retirement plan ensures you retain your peace of mind. 

Why retirement planning is necessary?

Many people tend to think that they have ample time left to plan for retirement. However, the truth is, there is no such thing as “ample time” in the case of retirement planning. The earlier you begin, the better you are covered. The absence of a proper retirement plan will take a heavy toll on the quality and standard of life post-retirement. 

Proper post-retirement planning must begin as early as possible. This ensures:

1. Guaranteed and regular income: 

A commendable post-retirement plan ensures regular guaranteed income either instantly after investment or post-retirement, as per the chosen plan terms.

2. Healthcare expenses: 

The inflation in the healthcare sector is reaching new heights each day. You should be careful enough to plan your retirement considering this significant factor, more because the healthcare requirements tend to rise in old age more. 

3. Financial security: 

One of the most highlighting reasons for post-retirement planning is to ensure financial stability throughout your life. A well-planned financial portfolio is competent enough to accumulate enough wealth to fulfil your living costs, healthcare expenses, along other necessary expenses, despite the absence of a regular work schedule. The earlier you begin, the more secure your future will be.

4. Independence: 

A well-thought-out retirement plan ensures you maintain your independence and lifestyle choices without any compromise. A comprehensive post-retirement plan allows you to fulfil your familial responsibilities, travel, pursue your hobbies, and many more. 

5. Handling emergencies: 

Emergencies may arise at any point. It is best to stay prepared as much as possible so that its effect on your financial portfolio remains minimal. Ideally, your retirement planning should be well-diversified with ample funding to act as a competent safety shield. 

Types of retirement plans

Retirement plans are financial tools that enable and ensure you enjoy a stable and secure financial future post-retirement. The 2 basic types of plans include:

1. Pension plans: 

These are investment plans that allow systematic money saving over a considerable period to ensure steady income after retirement. Pension plans are designed such that to combat inflation deftly without compromising on your current standard of living.

2. Annuity plans: 

This aids your financial future ensuring regular payments throughout your life. There exists an accumulation phase here, where you need to invest in this policy at regular intervals as per the plan terms. You can buy an annuity with these funds once you decide to retire. This annuity then ensures regular and steady income as per the chosen policy terms. In the case of an immediate annuity, you will begin receiving payouts immediately after you buy the plan. It is ideal for new retirees. In the case of a deferred annuity, you need to invest regularly throughout the accumulation phase. This amount gets invested by the chosen insurance provider for wealth creation and corpus growth. You will begin receiving the payouts from your chosen date. 

Annuity plans

It is better to opt for annuity plans if you:

• Possess a substantial investment corpus
• Seeking alternate regular income source post-retirement
• Are already retired or going to retire within a few years

Pension plans

Pension plans are ideal for those:

• Who are seeking wealth creation and corpus-building opportunities
• Willing to begin retirement planning from an early stage
• Maintain a clear idea of the investment limit per year

Features of pension plans

Some of the most significant features of pension plans include the following:

• Stable income: Pension plans are known to offer stable and regular guaranteed payouts post-retirement.
• Tax-efficiency: Some pension plans like Atal Pension Plans and NPS qualify for tax benefits under Section 80C of the IT Act.
• Emergency liquidity: Depending on the plan terms, certain pension plans allow partial withdrawals during the emergency phase in the case of financial contingency.
• Life coverage: These plans offer ample life coverage providing the beneficiary with a payout in the case of any mishap. 

Features of annuity plans

Some of the most important features of annuity plans are:

• Tax-deferred growth: This means that you can build your corpus tax-free till your payouts begin. This implies fast growth.
• Investment options: Multiple investment options like MFs, bonds, stocks, etc. help you to maintain a diversified portfolio. You can utilize the retirement calculator to reveal the potential returns from your planned investment strategies and proceed accordingly. Retirement calculator is easily available on any official insurance site.
• Life coverage: They offer life coverage implying that in the absence of the policyholder, the designated beneficiary will receive the remaining balance. 

Conclusion

We have highlighted all the significant aspects of retirement plans. Begin early and enjoy the power of compounding for sufficient wealth building and enjoy a secured retired life.