Are you someone who has been waiting for their retirement just to do things they wanted to do all their lives? If yes, you are not alone. Working in the corporate environment can sometimes make us give up our hobbies due to time constraints and work stress.
Even if you cannot think of the hobbies you would want to pursue after retirement but just want to relax, we get it. You worked all your life and got stressed; retirement is definitely the time to relax.
But even leading a relaxed and comfortable lifestyle requires funds. But when you do not earn a living after retirement, how do you think you will lead the life you desired in the first place?
For starters, you can consider investing in pension plans in India for effective retirement planning. Retirement planning is essential even when you are far away from your retirement years, and pension plans in India play a crucial role in retirement planning.
We will be telling you why in this guide.
What Role do Pension Plans in India Play in Retirement Planning?
They Provide Financial Assistance:
Pension plans in India are designed to offer financial support by providing you with a regular stream of pay-out to replace your lost income. The leading pension plans in India provide both annuity (staggered pay-out) and lump-sum pay-out to offer you the highest financial flexibility to fulfil your retirement goals.
They Aid you in Leading the Life you Want:
We all have our retirement dreams. While some may want to move to a quieter place on the outskirts, others might want to pursue their hobbies. Whatever picture you have for your sunset years, pension plans in India can come to your financial aid to help you live the kind of retirement life you dreamed of.
They Protect you From Financial and Health Emergencies:
With age come health issues. Managing these medical expenses can become challenging when you have no financial support after retirement. As some pension plans in India offer you a lump-sum pay-out, you can use the same to manage the financial repercussions of health emergencies.
Why is Retirement Planning Important?
Retirement is a milestone for working professionals. You must plan for it for the following reasons:
Retirement is the End of Financial Support:
Employment years can give you a lot of stress, but the one relief they can provide is that you have your finances sorted. You can manage your and your family’s financial requirements with a paycheque in hand and also save for the necessary future expenditure.
However, the financial problems may start when you retire. You are no longer employed, and you no longer get the paycheques. It can cause financial burdens on your well-being. However, with successful retirement planning and pension plans in India, you can be relieved that you will still have an income or funds even after you retire.
The Cost of Living is Expensive:
How much do you think you need for retirement? Take a rough guess.
20- 25 lakhs?
Well, if you have been living a comfortable lifestyle and wish to lead the same after you retire, 25 lakhs are too less of an amount.
You need at least INR 1 crore to lead a comfortable lifestyle and manage the health costs that come as you age.
In a nutshell, the cost of living when you retire can be expensive. But effective financial planning supported by pension plans in India can help you manage these costs efficiently.
You Have to Combat Inflation:
Inflation has never been a common man’s friend. If things are expensive now, imagine what the scenario would be when you retire. The picture can be scary.
But with a top-notch financial plan and pension plans in India, you can accumulate a corpus that can combat inflation. Just keep in mind that you account for inflation when you are assessing the financial requirements of your retirement years.
You Have to Become Financially Independent:
Being financially dependent on children can be off-putting for some individuals. You may want your children to carry on with their lives without stressing them about your financial requirements. The same can become difficult once you retire. However, with successful retirement planning and pension plans in India that replace your income, you can stay financially independent.
The Bottom Line:
Pension plans in India create a financial net around an individual to help them manage the financial challenges that are a part of one’s retirement life.
However, you must note that you must not depend on pension plans in India to meet all the financial requirements of retirement. It is suggested that you supplement pension plans in India with a sizeable savings corpus, life insurance and an investment portfolio made of investment schemes such as a Systematic Investment Plan. You can use tools such as a life insurance premium calculator, SIP calculator and financial calculator to take important decisions before proceeding with the investment.