How to secure your retirement financially
TR Ramachandran CEO & MD, Aviva India
No longer are people content with the idea of just relaxing at home, or taking care of their grandchildren post retirement. In fact, the idea of retirement is changing, with more people opting to exercise options after superannuation that they were unable to explore` while working. Taking a world tour with the partner, associating oneself with an NGO or a cultural organization, are some of things on people’s wishlist. Unfortunately, a lot of us forget to make a plan that will help us live this dream after retirement. Don’t be one of those ‘forgetful’ people.
A common question when planning for retirement is how to calculate the amount that one will need every year to maintain the current lifestyle. One has to factor in inflation and any emergency medical need that may arise. Ideally, you should build your retirement corpus byinvesting in a combination of options like retirement or pension plans, endowment products, public provident fund, fixed deposits and equities.
Retirement or pension plans: Instead of re-inventing the wheel by drawing up your own financial plan, you could consider policies offered by insurance companies. Insurance plans give you an option of claiming up to 30 per cent of your sum assured as lump sum on maturity, while the rest is paid off as annuity.
One must also buy a health insurance plan along with this as mere savings will not help meet the rising cost of medical needs or any emergency treatment.
Endowment plans: These are insurance cum-investment plans, a good option for risk averse individuals, where one has to regularly pay premium for a specified tenure, at the end of which a guaranteed accumulated corpus is paid out as maturity value. The advantage of investing in these plans is that even if the policyholder doesn’t survive the entire policy tenure, the sum assured or life cover is paid to the policyholder’s nominee, ensuring that the financial goals of the family can still be met.
In addition to these, an individual can also go in for a combination of public provident saving schemes, fixed deposits and investment in equities through Ulips and mutual funds to beat inflation costs.
Retirement is one of the most important stages in your life – you look forward to it and should save for. A little nest egg becomes even more critical as your comfort and security in your sunset years will depend on your retirement savings.