Retirement can be very overwhelming, as well as a sigh of relief at the same time. It serves the person because, finally, they can take a permanent break from their hectic work schedules and focus more on themselves and their family.
In this article, we will talk about everything you need to know about retirement plans, how to plan for your retirement, and a compiled list of the best pension plans.
Some plan their retirement when they are in their forties, but some plan for it just before they decide to resign. However, experts suggest the planning for your retirement should be done as early as possible as it will safeguard you from various uncertainties that life will throw at you. Retirement planning never stops; you have to constantly monitor your funds and foresee situations that you may land up in. For instance, you could face a life-changing illness and decide to sell your life insurance policy through a viatical settlement in order to pay off medical bills, affecting what your overall retirement plan looks like.
Most people dread retiring due to the cut-off in their income every month. Nevertheless, retirement planning can be easy if you are aware of your belongings and assets. Following these simple steps can help you to plan for your retirement efficiently.
1. Retirement year
This is the very first step you should consider while planning your retirement. Most people do not understand that the year of retirement has to be decided when you are working early in life. Retirement is flexible, and it is entirely up to the person, and a plan for your retirement will keep you focused.
2. Assessing the current financial status
Making a detailed inventory of your current expenses, liabilities, and assets is a safe point to start. This gives an overview of all the expenses you will continue to incur and the ones that may not exist once you retire.In addition, you can also use a pension calculator to see how much you need to put away for later in life.
After retirement, some expenses may be constant, such as entertainment, groceries, insurance, etc., while some may increase, such as vacations, medical expenses, comfort travel, etc. Some may also be taken care of by the pension and insurance plans that you may have signed up for better social security.
3. Valuation of assets and liabilities
Evaluating the current value of assets and liabilities is very important, and you can start by writing down the amount of money in all bank accounts. Further, you can include saving bonds, certificates of deposits, investment in stocks, and mutual funds. Make a list of the real estate you own and its value, including the value of the house you currently live in. It will also be useful to list the pension plans, IRA’s (Individual Retirement Account), or any retirement and insurance plans you might have opted for and if you decide to cash them now. Rental properties and businesses also come under the assets category, which you may want to consider.
Moreover, it is also important to take into account the liabilities that you have. These include the current mortgage and loans you may have taken. Credit card bills, investment accounts, monthly installments, and regular bills such as electricity, doctor visits, taxes, etc also have to be looked into.
4. Source of Emergency Fund and Budgeting
Financial problems are unexpected, and so you should save a corpus amount for such inevitable needs. These have to be in liquid form so that they can be spent for anything that comes along as an emergency. The best pension plan may not be able to save you from emergencies as it may not be in liquid form. The amount of the emergency fund varies from person to person.
Budgeting is another crucial aspect when you plan for your retirement. It is an analysis of your cash flow and gives you an idea of the exact amount required to maintain the same lifestyle. Having a budget will save you from the hassle of any unforeseen expenses, and also help to maintain the same lifestyle after your retirement.
Taxation and Risk Management
Tax planning is a constant ordeal for most people. However, it’s essential to plan for your retirement and understand the source of your funds. It is best to be aware of all the tax consequences so that you are prepared for any questions. The retirement savings are taxed under ordinary-income brackets, while others come under capital gains. You need to look for the best pension plan to enjoy all the benefits.
Risks are often overlooked when planning for retirement as people are actively focusing on the saving aspect. House insurance, car insurance, long or short-term disease, and health insurance have to be taken into consideration.
5 Best Pension Plans That Can Make You Financially Independent Even After Retirement
To make it easy for you, we have compiled a list of the 5 best pension plans you must consider if you want to live peacefully after retirement without worrying about your expenses. So, let’s move to the list of best pension plans.
1. Canara HSBC – Pension4Life Plan
The Pension4Life plan is one of the best pension plans offered by Canara HSBC that gives an array of annuity options that guarantees a fixed income for all your needs. It also gives a safety net to the family in case the person is deceased. Furthermore, the installments are very flexible; they can be made yearly, quarterly, or half-yearly and increased annuity is provided for higher purchases.
2. HDFC Life – Click2Retire
The plan offers gains from the market returns for the duration after retirement. It can be applied when the person is as young as 18 until the age of 65. We have included this in our list of best pension plans because it gives benefits to the nominee in case of the death of the first holder, and the funds can be higher than the total amount of policy purchased.
3. ICICI Pru – Easy Retirement
The easy Retirement plan of ICICI Pru is the best pension plan that gives regular income to the holder through equity investments after retirement. It can be opted for when the person is 35 until 70 years of age. The premium starts at 48000 per year with no limit. It is a great source of steady income considering market volatility.
4. Reliance Smart Pension
This policy helps the holder contribute systematically and end up with a lump sum amount that can be useful after retirement. The term is between 10 to 30 years, and they guarantee loyalty additions.
5. Bajaj Allianz- Pension Guarantee
This is one of the best pension plans that gives 6 annuity options and provides immediate annuities after the person has retired. It can be opted for at the age of 37 to a maximum of 80 years. It also gives extended annuity to spouses if needed.
Why Are Pension Plans Must?
As we have covered the complete list of the best pension plans above. Everyone wants to be financially independent, both while working and when retired. A retirement plan focuses on covering financial costs in the post-retirement phase using collected funds. A regular premium retirement plan creates a financial corpus that may be used to provide you with pension money to have the same financial freedom in the post-retirement period. The retirement plan also provides a death benefit to the family in the event of the life insured’s untimely death.
Retirement may happen overnight, but its planning can take years of research and in-depth preparation. The plans can also change depending on various activities and circumstances in your life. Go through our list of best pension plans and choose the best one for you so that you can have peace of mind after your retirement.