Retirement Planning in India
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Everyone wants to lead a comfortable retirement. Without adequate planning it probably won't happen. People are living longer than ever before, which is obviously good news, but that means retirement is becoming more expensive. Only 11% of the working population in India has any form of social security for old age
Retirement planning means setting aside of money or assets for the purpose of deriving some income during old age. This is to be done before reaching retirement age. But the process of retirement planning is based on a person's desired retirement age and lifestyle.
Steps to retirement planning
Start early and retire peacefully
For example, start saving for retirement at age 25, so that even if you wish to retire by 60, you have an investment horizon of 35 years. If at the age of 25, you start investing Rs.10, 000 per Annum at the rate of 13% compounding then the maturity amount (when you are 60 years of age) will be Rs.1, 300,000. Alternatively if you commence the same investment at the age of 35, then the maturity value at the age of 60 will be Rs.650, 000.
With a 10 year lag, the retirement savings at 60 years is more than halved!
Consult a financial advisor
Remember, your aim is to make decisions that will be most effective in helping you to realize your future financial goals, based on your current personal financial situation.
Track and review your plan
Don't dip into your retirement savings
Types of Plans
Annuity is a series or stream of payments. An annuity is a contract with an insurance company under which they pay money for a stipulated period.
The conversion into retirement is a very unique and dramatic step in life. Yet, the transition into retirement is rarely given the planning or thought it deserves. Unfortunately, far too many people go into retirement with no planning, and little understanding of what will happen. Actually the rising stock market and the improving real estate property values all disguise the fact that the hefty company compensation plans in the past are no longer present today.
But middle-aged individuals believe that they can expect a higher standard of living once they retire and spend their time in leisure, but it is in vain. This is because they had not planned their retirement properly when they were working and their standard of living declines significantly.
Retirement is the stage where you should enjoy the fruits of your labor. These issues are a wake-up call for people who are nearing retirement. So it is important to plan ahead and be financially prepared once you reach retirement age. So it is better to understand the social aspects of retiree's life and look into those investment options which suits better and face retirement with excitement rather than fear.