Reasons for creating your Retirement planning

When you plan your retirement, you are assuring your future so that you don't have to worry about income generation when you are no longer working. In simple terms, you retire from work but keep getting paid during your old age because of your savings. Retirement planning is crucial and something that you cannot ignore. Here are some of the most important points about planning your retirement.

A retirement advisor can help you get the ideal tips for easy retirement and the right time to retire. They can help you define your retirement goals, consider your current financial situation, anticipated income during retirement years, and managing current expenses. These are points that even a professional at different levels would have difficulty determining for themselves. During the planning, it is essential to make honest assumptions.

This will help get genuine results based on the information you provide to your retirement planner. Include major expenses such as purchasing a house, vehicles and even real estate investments before your retirement years. In addition, children’s education and marriage are other major expenses that could fall in the pre or post-retirement period. Your retirement plan would therefore mention ways to cover these big expenses. Your retirement plan will help you with chalking out the things that you could do after retirement. You will get a clear viewpoint about your current and future needs and expenses.

This is something that will help you lead a straightforward life where both your current and future needs are met without you having to worry about things. If you have a plan in action, it will also help in easily adjusting the expenses according to the financial needs that arise during your retirement years.

 It will guide you about your post-retirement lifestyle and prevent from making any dramatic changes. A well designed retirement plan will also help you become financially protected at a time when most other people in India become dependent on their children.

Another benefit is that it will help you get tax benefits, which is crucial at a time when you are not earning. A retirement pension plan will help you in avoiding mistakes and learn exactly what you need to do after retiring. Most importantly it will help eliminating any worries that you would otherwise carry into your post-retirement life if you were not to have any plan at all.

In addition to using the services of a retirement advisor, it is also important to make your own research. Using a retirement savings calculator is an effective way to create a clear sketch of your retirement plan. Thus, planning your retirement well in advance will always help you to avoid the panic and see your post-retirement years in a positive perspective.

[Source: http://best-investment-options.blogspot.com/2013/08/reasons-for-creating-your-retirement.html]

Investment Insurance Plan - Classified Ad

Investment Insurance Plan - Classified Ad

Here is how you can save big money for your retirement

Retirement planning is an inherent part of financial planning process. Although it is considered as very critical goal still most of the times people do not keep it on priority while saving. You may be a 25 year old professional just starting your career or a 50 year old nearing retirement, retirement planning cannot be overlooked.

Government sector employees get regular pension after retirement. However, private sector employees and self- employed individuals have to prepare for their golden years. Therefore, importance of retirement planning is increasing day by day for an individual. The pre-retirement phase which is also known as ‘accumulation phase’ can be used to plan for retirement with various products available in the market.
The proportion allocated towards retirement planning in a plan depends upon many factors such as, current standard of living, expected inflation during post retirement phase, expected rate of return from the investments. Let us discuss various products which can be used to invest wisely for retirement planning.

1. Pension plans of Mutual Funds: Mutual funds are the best way to plan for retirement. They offer liquidity option with minimum charges and are successful in creating long term wealth. Till now only three mutual funds companies offer pension plans, they are – Franklin Templeton, UTI and Reliance Mutual Fund. While Franklin and UTI offer Debt oriented plan with only 40% equity exposure, Reliance offer equity oriented plan with 60% minimum of equity exposure. The amount invested is eligible for tax exemption under Sec 80 C. Also the exit load is high to discourage investor to withdraw funds and stay invested for long term. Although, a plain vanilla mutual fund scheme can also help in planning retirement still the lock in feature and exit loads make pension scheme better positioned as compared to other schemes.

2. Provident Fund: There are two types of provident funds available in India - Public Provident Fund and Employees Provident Fund. Both are popular means to save for retirement plan. Employees Provident Fund (EPF) is only for employees of an organization wherein the contribution is deducted from the salary of the employee. Employer also contributes into the funds up to the limit as prescribed in the act. Employee can redeem the fund once she is out of job after obtaining NOC from past employer. Public Provident Fund (PPF) account on the other hand is available for general public. One can open PPF account at select banks or Post office. The PPF account has lock in period of 15 years. However after 7 years one can withdraw the amount according to the rules. Self-contribution in both accounts is eligible for tax exemption under sec 80 C.

3. National Pension Scheme: NPS is a defined contribution based pension scheme launched by the government. The scheme is compulsory for government employees and optional for private employees and self-employed. Any Indian Resident between the ages of 18-55 is eligible to invest. The scheme is structured into two options: a) Tier – I account: This account is mandatory for all government servants who will make a contribution out of his salary and government will also make an equal contribution. In case of private sector employees there will equal contribution from his employer.

The withdrawal is not allowed before retirement age i.e. 60 years. The amount invested into this account qualifies for deduction in Income tax. b) Tier – II account: This account is optional for government employees in which there will be no government contribution. Private sector employees can also invest into this account. This account permits withdrawal prior to the retirement age. No tax benefit is available on investment in this account. However, to open this account an investor needs an active Tier-1 account.

4. Pension plans of Insurance: Many insurance companies have launched pension plans which aim at providing pension to the insured after retirement. There are two types of pension plans – unit linked pension plans and traditional endowment plans. 80% of the pension plans in the industry are endowment plans.

Out of all the available options, mutual funds pension plans are best in the lot. They generate better returns and also have better liquidity than any other pension product. However, planning retirement with the help of an advisor is recommended as different people have different risk profile and lifestyle to support savings towards this goal.

[Source:http://www.moneycontrol.com/master_your_money/stocks_news_consumption.php?autono=1286681]

Retirement Planning should be your biggest Financial Goal

How will your retirement look like? Have you thought about anything on retirement planning? This is something, which you should spend some time on. Our parents and grand-parents might not have given much importance to their retirement, they might have just took it as it came to them, but can we also afford to do the same with our retirement? Would you like your retirement to take shape just like your parents? Let’s discuss it and take some food for thought from this article today. This is the 3rd and last article in the series called “Financial Planning and Social changes in India.

In our country, where a very small number (less than 10% of the workforce which is in the organized sector) has access to some social security like provident funds, but the rest – almost 90% of the workforce – has no social security, Retirement Planning is a major issue. If you take care of your retirement planning, your future will probably be much better and in control than without doing anything. It has become extremely important to plan for one’s retirement and at least take a step towards it. I will list down some pointers which shows why retirement in future India will be much bigger and serious issue. Look at all the points in totality and you will realize that planning for owns retirement is not just an option but a necessity these days.

1.       Increase in life expectancy in India

One of the major problems while doing retirement planning is to assume how long the retirement will last. Retirement plan company this has a direct relation with life expectancy. As a country develops, its healthcare and overall life style level improves and life expectancy increases. You can see the life expectancy in India is moving up and up with each passing decade. It was 49 yrs in year 1970, increased to 64 yrs today in 2011 and is set to increase up to 73-76 yrs in 2040-50 (projections).

2.       Increase in Dependency Ratio

Dependency ratio means the ratio of Old age population vs. Young population. To calculate it, just take total population above Age 60 and divide it with population between 15 yrs – 60 yrs and you will get Dependency Ratio. You will be surprised to know that right now in 2011, the dependency ratio is around 5% in India, but in year 2050 this ratio will rise to 15%, which shows you that more and more people are going to be in the old age group compared to young population. See the chart below.

3.       Decline of joint family structure

If it was 1970, you could have safely assumed that you will be probably spending your retirement with your grown up kids, playing with your grand children, but is it happening anymore in these changing times? More and more people are moving in different parts of country in search of education, jobs and settling their compared to old times.

Parents on the other hand don’t choose to move most of the times as they feel connected to the same place where they have spend all their life and more than that , they have their social groups at those native places. Very rarely I have seen that parents leave those places where they have spent 30-50 yrs of their life.

Best Investment for your Retirement?

So what’s the best Investment you can do today which will make sure you live happily in retirement? If you thought that it’s some financial product or a strategy to make some extra bucks, you are wrong! I am talking about your Health here. Note that reaching destination is important, but after reaching the destination if you don’t feel joy and happiness and are not able to enjoy the fruits later, all the hard work you will put for reaching for destination will go waste. 

You will be living for 25-30 yrs minimum in your retirement, Now if you have all the money, but no proper health at the end, you will not be able to eat what you want, you will not be able to roam around places, you will not be able to enjoy each moment of your life, what’s the use of all your hard-earned money in that case?  I would say all your efforts will be waste. This is one serious point I want you to take home today. Think about it.

[Source: http://www.jagoinvestor.com/2011/03/retirement-planning-india-future.html]

Significance of Retirement Pension Plans

To earn a reasonable income and lead a comfortable life, Retirement Pension Plans are basically a financial assurance that a person will continue, even when he retires from work. The popularity and trend of opting for Retirement Plans is gaining strength. 

In fact, in order to increase their future financial security, many people from the government services sector in India are choosing secure pensions after retirement and this is the reason a retirement pension plans are gaining popularity.

Nowadays, there are several reasons for these retirement pension plan  becoming popular-

Cultural and Social Paradigm Shift

The joint family system is crumbling slowly and gradually. Nuclear families are becoming more and more popular and parents are increasingly under pressure to provide for their own income after retirement. Secondly, to have an independent income in their old age is preferred by the older generation itself as they are more independent minded, and they do not wish to depend upon their children for financial survival.

Rising Costs of Living

In the olden days, after retirement, people could survive on a minimum expense but now they need retirement pension plans to stay comfortably and maintain a good standard of living. Since in modern times, the costs of living has gone up very high, it is essential to have solid financial backup in case of any emergencies. In older age, the costs of medical care are high and in most cases, insurance cannot cover the entire cost of care. Therefore, for a reasonable survival after retirement the retirees are increasingly looking at creating a sufficient post-retirement income.

Longer span of life

The average span of life in India has gone up because of improved health care facilities and medical advancements. As a result, the length of post-retirement life has gone up. This is encouraging more and more people to plan for a consistent income after retirement that can support them throughout their retired life.

Variety of retirement pension plans

Both in the private and public sectors, there are many different retirement pension plan and schemes. But essentially, there are four types of retirement plans.

Guaranteed Period Annuity: In these plans, for a minimum number of years, the person is guaranteed a specific income. The nominees will continue to receive that income till the period is completed if the person dies before that period. He or she can continue to receive the income till his death if the person outlives that period.

Life Annuity Plans: Till the time the person continues to live these plans guarantee a person a specific amount of income. The originally invested amount is refunded to the beneficiary’s nominee after the person’s death.

Annuity Certain: Under this retirement pension plan, for a fixed number of years a fixed amount of income is paid. Even if the retiree is still living at the expiry of this period the payments will stop at the end of the period.

Deferred Annuity: Under this plan, to create a corpus fund for a number of years, the person first saves from his income. Thereafter, giving an assured income for the retiree till he or she lives as that fund is used for investing in a specific retirement plan.

[Source: http://blogs.siliconindia.com/johnmark12/Significance_of_Retirement_Pension_Plans-bid-1I8lvaCs87910146.html]