Retirement planning differs from individual to individual depending on several factors such as the expected lifestyle, current income, risk tolerance and the time horizon. Begin by taking into account the lifestyle you expect to maintain after retirement. As a thumb rule, it is said that you will need 70-80% of your current annual income.
Principles of Retirement Planning
- FD, NSC Define a goal: The post-retirement needs of every individual is different. It is important to define a goal to get started. After the goal is clear, formulate some checkpoints that would help you keep the growth of the retirement corpus on track.
- Save and invest: Retirement planning is not a one-dimensional activity; it requires an array of investments and encompasses several goals. Before retirement, many people have to buy a house or get a child educated. These goals would need a different financial product, but the outgo will have to be divided with the retirement plan. Taking multiple factors into account, decide the time horizon of your investment for retirement planning.
- Plan for a long life: Most people make the mistake of using outdated metrics to plan for retirement in the contemporary world. The life expectancy rate of people is rising across the world. Planning for a short retirement period can lead to exhaustion of the accumulated corpus. With the Whole Life Option of the Invest 4G plan, you can live a stress-free life as the policy remains active for the entire life.
- Minimize taxes: Tax-efficient retirement products such as ULIPs indirectly multiply the savings. Lower tax outgo eventually adds up into the retirement corpus. You can avail double tax benefits through the Invest 4G plan. The premiums paid for the policy are eligible for deduction under Section 80C, while the maturity amount is exempted from tax under Section 10 (10D) of the Income Tax Act, 1961.