There comes a point in every person’s life when one stops working either partially or completely. Physical conditions such as illness, Accident or old age are generally the factors that force a person into retirement. The time in a person’s life after retirement is one that causes great anxiety. As a retired person you may have minimal or no source of income. You are anxious about your source of income, health and other day to day expenses and so on.
Hence you must have good strategies in place, from early in life, how much you will set aside for retirement. Also, you must have a steady source of income in your post-retirement days. And it helps you better focus on what's really important in your retirement years--taking care of unfinished family matters, meeting friends, take up social causes and so on. The earlier you start, the better placed you will be in the long run in life.
Therefore, a constant source of income, such as a Pension
plan, is one that you must have well in advance in your life. You may receive a pension from the government or will need to arrange for your own retirement plan. There are various options where you can carry out your own retirement planning
by private subscriptions to mutual funds etc.
Retirement Planning Options in India
In India besides government pensions, different insurance companies, mutual funds as well as postal offices provide various financial plans, which you can then use as post- retirement income. Let’s have a look at such plans:
•Employee provident fund
•Employee pension plans
•Public provident funds
•Senior citizen savings schemes pension plans
•Stocks and bondsHow It Works
You can then transfer your Maturity
amount from the above sources to any Annuity
plan at the time of retirement. Many of the prescribed annuities offer guaranteed income as well as tax advantages.
Insurance companies offer various pension plans (retirement plans or annuity plans) where you initially invest either a lump sum amount or regular annual premiums over a period of time. This is in return for regular income that you will then get either for life or for fixed number of years, based upon the plan.Annuity Plans in IndiaEssentially the retirement annuities plans can be classified into four types:
Annuity Certain: Under this plan, a fixed amount of income is paid to you every month for a fixed number of years. The payments automatically stop after this period, whether you are alive or not.Life Annuity Plans:
Under this plan, a fixed amount of income is paid to you every month till the time you live. After your death, the initially invested amount is refunded to your nominee.Guaranteed Period Annuity:
Under this plan, a fixed amount of income is paid to you every month for a minimum number of years. If you are alive after that period, you still receive the income till your death. If you die before that period, your nominee will receive that income till the period is completed.
Deferred Annuity: Under this plan, you first save from your income to create a mass fund. You then use that fund to invest in a retirement plan that gives an income every month till you are alive.