Smart tips to plan for your retirement better
Now that you have already read our blog on the things to consider if you are a beginner in retirement planning, it’s time to delve deeper into the subject and be intelligent about the plans you make. If you want to live an actual stress-free life post-retirement, it is wise to build a steady income plan for at least 30 years after your retirement. Factoring in incremental costs on healthcare, lifestyle needs among the elderly, and increase in the cost of living as a result of inflation.
Here is a deeper analysis of how this plan should pan out and quick tips to build your A-game in retirement planning.
|Accumulation phase||Vesting age||Annuity period|
|During this phase, the choice is up to you to either invest a large amount at once or do it in periodic intervals. The money that you accumulate at this stage, will grow into a sizable corpus over a period of time.||Typically in India, this period starts at the age of 60-62. This is when your service life comes to a close and you will begin receiving a pension.||Your annuity period starts when you start receiving your pension payments following retirement. For example: If you expect payments to start at the age of 60 and last until you are 80, your annuity period will be 20 years. Depending on the plan you picked, you can avail either a partial or full withdrawal.|
Investing in real estate seldom goes wrong when the decision has been well-researched. It is one of the best post-retirement income streams you can consider during planning. Depending on your needs, you could choose rental yield or reselling. In the case of multiple assets, your rental income is higher. You must also keep in mind that property valuation and rent increase every year, it helps you stay one step ahead of inflation. Invest in real estate early on in your career so your home loan is all paid off when you near retirement age.
One of the lesser-known ways to create an alternate income stream from your owned properties is to choose the reverse mortgage option. A reverse mortgage becomes an available option for you once you hit the age of 60 and your spouse is over 58. You are expected to have a fully owned house by then and the property should be at least 20 years old.
Schemes tailored to needs
|Senior Citizens Saving Scheme||Monthly Income Scheme at Post Office
|Mutual funds||Pension Funds|
|Most public sector banks like the SBI allow an investment scheme for senior citizens. This investment instrument is made available to seniors over the age of 60, when the investment yields Rs 15 lakh, offering an interest rate typically upwards of 8%. The scheme also allows tax benefits under section 80C of the Income Tax Act. The interest earned will be taxable, but it offers one of the highest interest rates.||This investment scheme offers guaranteed annual returns. It is also an option to look out for because it keeps the initial capital while yielding more lucrative results than other debt instruments. It also facilitates a recurring deposit, which hastens savings. The maturity period is typically 5 years. No TDS is applicable for this scheme but the interest you will earn will be taxable. It also does not qualify for tax benefits under section 80C of the Income Tax Act.||If you are looking for an investment option that helps grow money the fastest, mutual funds are your pick. However, the risks attached are still less than the ones involved when you are investing in the primary market. The income you make here will also be taxable.||Pension funds and saving schemes are among the most common options. This is a really low-risk instrument and helps preserve the capital. However, returns are on the lower side|
The Bottom Line
Retirement planning is serious business and decisions around it cannot be taken lightly without adequate research. There is an irrevocable cost of going wrong at the planning stage making your later years significantly tougher to take control of. If you are dealing with more complex retirement decisions, consider taking assistance from a seasoned financial advisor.