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Retirement with No Income is Difficult to Pass. Here is How You Should Plan for This Age

You must have envisioned your life post-retirement sipping cocktails on a porch, relaxing on a cozy mountain treat or off to travel the world. After all, just like there’s happily ever after in every movie, everything will sort itself out at the end, right? Then have a look at some of the post-retirement plans!!

However, that is not the case in real life. It takes careful financial planning to fulfill your aspirations post-retirement. To make your retirement life more pleasant, retirement planning should be on your priority. To start with, you should understand that your savings and investments should be structured to fit your lifestyle preferences and desires.

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It is also true that during the early part of the last decade, people used to think and talk about retirement planning only in their early 50s. However, lately there has been a drastic change on that front, and many people have started investing and planning early for wealth creation and financial security.

Hence, you should also start getting your ducks in a row early on, rather than when it’s too late. Develop a retirement plan to protect the assets you have worked hard to acquire. Likewise, you can kick start your financial planning by investing your money in the following ways:

Public Provident Fund

One of the market’s most sought-after retirement plans is PPF. People usually turn to invest inPPF because of two reasons. First, due to its annual compounding, second, because PPF offers yearly tax-free interest. If you want to go for a long-term program to plan your retirement, then Public Provident Fund is one of the best bets.

The interest rate on PPF is set by the government, which is revised every quarter based on government securities ‘ return(profit). In 1968-69, the compounding interest proposed by PPF was 4 percent, while from 1986-2000, it increased to 12 percent. The current rate of interest on PPF, which was revised in July 2019 is 7.9 percent. For PPF, however, the compounding power works best for long-term situations. Therefore, you should start your retirement planning early in this way.

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National Pension System

Pension plans play a crucial role during your old age when you do not have a stable and reliable source of income. National Pension System provides stability and financial security, as well as ensure that you live your life with pride without affecting your living standards.

Simply put, it creates a large post-retirement corpus and serves as a saving-investment tool that encourages continuous savings during your working years. This scheme is created by the government and has several advantages even for low-income earners. The money that you invest in an NPS is contributed to three classes of funds, namely Equity (E), Fixed Return Instruments (C), and Government Bonds (G). You have the choice to select the distribution of funds. However, investment in equities is confined to 50% of the contribution. 

Equity Linked Saving Scheme

Equity Linked Savings Scheme is an open-ended mutual fund scheme with a 3-year legal lock-in period. It is the only mutual fund scheme that qualifies under section 80(C) of the Income Tax Act for a tax deduction. This is the main reason why ELSS stands out among all the other retirement plans.

It invests mostly in market-linked instruments, such as equities, which produce high returns in the long run. Compared to other tax-savings opportunities such as PPF, tax-saving Fixed Deposits (FDs), ELSS fares well in terms of return on investment. Hence, you can also invest in this wealth creation option that comes with tax benefits.

Investing in these financial instruments will help you lose all your worries about the life that you plan to lead after your retirement. If you find it challenging to choose the appropriate financial instruments, you can ask for help from the reputable financial advisors like FinEdge to help you out with your retirement planning.

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