Planning for your retirement is a significant aspect of your working life – one that must not be delayed or neglected. It is important to consider that the earlier you formulate and implement a savings plan for your after-retirement plans, the better placed you will be to achieve the objectives of those plans. Therefore, it is always advisable to begin your retirement financial planning in your twenties or thirties to have a long enough time to accumulate an adequate corpus for your post-retirement years.
It would be best if you began with an assessment of your financial situation, future financial goals, expected retirement age, and the ideal retirement corpus to sustain your current lifestyle. After that, you should research various available investment avenues and select the ones that align with your retirement plan. You should choose from many investment options that are available so you have a portfolio for your retirement financial planning.
One of the investment options that you can select is a guaranteed savings plan; this plan offers you a guaranteed income after your retirement. Furthermore, the plan also provides you with life insurance cover, thereby safeguarding your family against uncertain events in the future. Thus it combines life insurance with guaranteed returns.
Tata AIA Life Insurance offers some smart savings insurance plans to help you with your retirement planning. These plans are flexible as either an endowment or guaranteed payouts at predetermined percentages of the annualized premium as regular income. The plans also offer additional benefits to women policyholders.
It is advisable to design your investment portfolio per your risk appetite, expected returns, and retirement financial plan. A wide selection of investment instruments to build your portfolio is available, some of which have been discussed below:
- Insurance Plans
The investment portfolio for your retirement financial plan must contain a term insurance policy or an endowment insurance policy to safeguard yourself and your family in case of any unfortunate event. As these plans carry income tax benefits along with life insurance, you must include one in your portfolio. In addition, pension plans have the option of additional riders, such as waiver of premium, which you must consider to maximize benefits under the plan.
- Unit-Linked Insurance Plan (ULIP)
A Unit Linked Insurance Plan, or ULIP, is a product that offers you the benefits of insurance as well as investment. By investing in a ULIP, you can receive the benefits of a life insurance cover and investment in the fund/s of your choice. A ULIP provides considerable balance to any retirement financial plan.
- Equity Mutual Funds
You can adhere to a systematic savings plan to invest in equity mutual funds; these funds invest in equity shares in the market. However, since the value of equity shares is susceptible to sudden and drastic change based on the movement of the share prices in the market, you should ensure that only a small percentage of your portfolio is constituted by equity mutual funds.
- Debt Mutual Funds
A relatively safe mode of investment for your after retirement plans is debt mutual funds. These funds invest in debt-based instruments and government-issued bonds, which carry a fixed interest rate and are almost entirely risk-free. Including debt mutual funds in your portfolio reduces the overall risk and uncertainty of your investment.
- Balanced Mutual Funds
You can also opt for balanced mutual funds to channelise the funds from your savings plan. Balanced mutual funds invest your funds in a combination of equity-based and debt-based instruments, thereby ensuring that you benefit from high returns from the former and the certain and low-risk returns from the latter.
You look forward to living your retirement years free from financial worries. To achieve financial freedom after you stop working, you should tailor your savings plan and your retirement financial plan into an investment portfolio comprising insurance plans, ULIPs, equity-based mutual funds, debt-based mutual funds, and balanced mutual funds. A well-balanced and flexible portfolio ensures income and wealth to help you live at your current standard even if you have said goodbye to the workplace.