Retirement Plan : An Overview

Most people work very hard throughout their life to become independent and to provide for their loved ones but as they grow old they seem to lose their financial freedom to lead a life they have always wanted to. A good retirement plan is an investment strategy, which lets you save a part of your earning and in return lets you enjoy a steady flow of income in retired life long after you have retired.

Why You Need an early Retirement Plan?

Many of us spend our entire lives trying to earn a living; the thought about planning our retirement takes a backseat. This habit is not favourable for a financially secured life post retirement. Invest in a retirement plan as early as possible and let your savings grow with you. Secure your future today to lead a lavish retired life.

What are the main types of retirement plans?

There is always a lingering fear of outliving one’s savings; to combat this fear once and for all, it is necessary to invest in financial instruments that will ensure a comfortable lifestyle in retirement even amidst financial crisis, high inflation and unexpected need of fund. The following are four of the main types of retirement plans that one can invest in:

  • Government-Sponsored Plan: Under the government sponsored Swavalamban Scheme, the central government contributes a sum of INR 1,000 to eligible subscribers of National Pension Scheme. A person, who contributes a minimum sum of  1,000 and a maximum sum of  Rs.12,000 pa is eligible for availing this government sponsored retirement benefit .
  • Personal Plan:Individual Retirement Agreement is a popular personal retirement plan that also allows one to invest in stocks, bonds and mutual funds. This plan lets the investor to avail a variety of tax advantages depending on the investment structure. The rate of interest is high and varies for each type of plan is different.
  • Annuities:Annuities make a good retirement investment. The investors can avail an annuity policy from an insurance company and enjoy deferred tax till the withdrawal of the deposited sum. There are 4 types of annuities:
  1. Immediate
  2. Delayed
  • Fixed
  1. Variable
  • Employer-sponsored Plan:A type of pension plan that is offered by the employers. It offers tax benefits and several other advantages to the employees. This type of plan is further divided into two types depending about the set of code it follows:
  1. Qualified retirement plans
  2. Non-qualified retirement plans
  • Fixed deposits: Fixed deposit is a popular choice of traditional retirement plan. Savings account holder can deposit a sum of money and accrue a steady interest at a rate of 5-8 % over a period of time
  • Mixed Polices: Certain Fund houses also have mixed policies that may or may not be linked to the equity market. Recent trend being adding a life insurance scheme to that to save you from paying taxes on the long term gains. You might want to opt for these as they come from robust fund houses.

Before investing in a policy, make sure that you have done a thorough research on the terms and conditions, mode of payment and over all benefits of each plan. You of course need a sound sleep at night, but not your money! Come to us for a customized plan and let it work for you 24X7.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not an indicator of future returns. Wealth Redefine is a AMFI registered Mutual Fund distributor – ARN - 167127

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