It is important to think about future security to have a financially independent life after retirement. As it is important to do retirement planning to make life easier. However, it is important to plan for your life post-retirement if you wish to retain your financial independence and maintain a comfortable standard of living when you are no longer earning. Even these days, some retirement plans are offered by life insurance providers are bundled products that mean they offer the benefits of both insurance and investment.

Phases of Retirement plan

Accumulation phase

  • Where you pay premiums and the money accumulates through the tenure of the plan and then the accumulated amount is invested in securities approved by IRDA, the insurance regulator.

Vesting age

  • It is the age when you start getting payouts. The vesting age can be selected by you and it is about 40 to 70 years in most of the plans.
  • You have more options in the form of retirement products from even mutual funds if you have been thinking about planning your retirement.
  • The main advantage of mutual funds retirement products is that you don’t have to buy an annuity (a fixed sum of money paid to someone each year). As in the case of pension plans from insurance companies.
  • Instead, you can opt for a systematic withdrawal plan to meet your regular cash flow needs.
  • Since a part of the withdrawal is your principal, it will be more tax-efficient as well.

Who needs Retirement planning?

For retirement planning, age doesn’t matter. People should start setting aside money for retirement as soon as possible. Little investment and savings can be a great relief to you later in life. Retirement planning includes setting up different accounts and monitoring investments.

Each person has a unique situation with different needs when it comes to their financial assets. Whether you own your own business or have worked for the same company your whole career; whether you are hoping to travel around the world when you retire or you hope to help your grandchildren go to college, you need planning to help your goals happen.

Importance of retirement planning

Future Security

Retirement planning in an early stage of life ensures security for future goals. After all, What a common desire after retirement is just a satisfactory life where you can spend some good time with your family members, Sitting in a garden in front of a home, having tea, and playing with their grandchildren.

Medical Emergencies

Unforeseen medical conditions are one of these things that you cannot predict. As you already know, with increasing age, people are more likely to get affected by health problems. Expenses due to medical conditions may make a huge dent in your income post-retirement. Failure here could lead you to liquidate (sell) your assets to meet such expenses. Remember medical claims do not always suffice.

Estate planning

Let’s seething from a more positive angle, let’s consider your family and loved ones for a moment. Part of your retirement savings may help contribute to your children or grandchildren’s lives. Without a well-planned retirement nest egg, you may be forced to liquidate your assets to cover your expenses during your retirement years. This could prevent you from leaving a financial legacy for your loved ones, or worse.

Flexibility to deal with changes

Unforeseen illnesses, the financial needs of your dependents, and the uncertainty of Social Security and pension systems are but a few of the factors at play. A secure nest egg will do wonders to help you cope with the challenges of your life’s later years. The challenges of your younger years are finding a way to set that up.

Tax deductions

Money is very precious to us and we want to save it in any possible way. With a Retirement Plan, you can save your tax money in form of tax deductions. Get tax benefits of the premiums you pay and the benefits you receive. So you not only have reduced taxes but also saving for an affordable future. If you are still not convinced of all the above reasons then just think of the life you want to spend 20 0r 30 years later from now. If you don’t want to do it for yourself then do it for the people you love and for their happiness? After all, true happiness is in keeping your people happy and secure.

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