We all want our lives to be secured from each and every aspect of life. Sometimes we found ourselves so busy in our respective lives that we even forget the fact “time will never be same as today”. That is why it is important to think about future security. Here, with future security, we mean retirement plans. In order to have a financially independent life after retirement, it is important to do retirement planning to make life easier.
Retirement is an important reality for everyone. Today, Our young generation think retirement is a long way off. 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. A typical retirement plan has 2 phases:
- Accumulation phase– Where you pay premiums and the money accumulates through the tenure of the plan and then 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 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?
One word “EVERYONE“. Yes! Everyone, no matter how old you are or what are the circumstances, Retirement planning should be a part of your intentional living.
For Retirement planning, age doesn’t matter. Most of the young generation thinks that they have ample of time to think about the retirement plan but that is not at all true. 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 the 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.
Now let’s come to the five reasons that one should start planning for retirement at an early stage of life:
- Future Security
Retirement planning in an early stage of life ensures security to the future goals. Everyone wants to spend a peaceful life where they don’t have to be worried about anything after they stop working or earning. After all, What a common desires after retirement is just a satisfactory life where you can spend some good time with your family members, Sitting in a garden 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 the 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 in order 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 in order 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 something which 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 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, the true happiness is in keeping your people happy and secure.