Retirement planning is an essential part of your financial planning. Securing your financial future for when you will no longer be earning regularly is as crucial as earning to meet your current needs.
But how does one plan for retirement? Do you choose the best retirement plans to take care of your needs in your golden years? Contrary to the popular belief choosing a retirement plan is only one part of retirement planning. Well, then what is retirement planning, and why should one plan for retirement? Let’s find out.
What is retirement planning?
Retirement planning is important in financial planning that assures an additional source of income and assists you take care of your medical expenses and fulfill your aspirations even after you retire.
Why plan for your retirement?
1. Money works when you won’t
None of us can and wants to work all our lives. You will want to retire at some point and enjoy spending time with your loved ones and fulfill your aspirations. Choosing from the best pension plans in India acts as retirement insurance for you ensuring your financial freedom even after you are not earning a regular salary.
A well-planned retirement corpus will help you take care of your daily expenses medical emergencies, fund your dependents’ needs, and fulfill your dreams without losing your financial freedom.
2. Stress-free life
We can stretch ourselves financially during our working years. Managing loans and taking calculated risks is easier when you have a steady source of income. Retirement is the stage, however, where we lose the prominent salaried income. Retirement planning thus becomes essential to financially strengthen yourself so you can worry less about the financial expenses and relax and enjoy the golden years of your life.
In other words, by starting retirement planning at an early age, you are ensuring peace of mind when you finally want to stop working and enjoy your life to the fullest.
3. Cost-saving
Talking about starting retirement planning at an early stage. One of the major benefits of starting early is you can buy the retirement plans at a lower cost at 25 than when you buy the same plan at the age of 35. Ideally, you should start investing in pension plans in India when you receive your first salary.
Doing so would help you secure enough retirement corpus at lower premiums than the premiums you would have to pay 5 or 10 years later for the same assured amount. Moreover, when you are starting your career, you don’t have the responsibilities of family and kids on your shoulder. Thus, keeping a part of your income aside for your retirement becomes easier.
4. Tax benefits
Most retirement plans make you qualify for tax exemptions. Plans like PPF and NSC qualify for tax exemption under section 80C of the Income Tax Act. Choosing the retirement plans in India qualified for tax exemption is a great way to tax while building a retirement corpus for your golden years.
Now that you know the major reasons and benefits why you should plan for your retirement, the next question that comes next is how to plan for retirement. Well, as we said earlier, retirement planning is more than planning for finances. It is a blend and balance of personal and financial planning. Considering important factors such as your lifestyle, daily expenses, medical conditions, family medical history, your current earnings, and dependents at the time of retirement will help you plan for a comprehensive retirement financially and mentally.
