Pension Plans

help plan for retirement and offer the security of insurance.

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Role of Pension Plan in Retiring Rich

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We would all like to take life for granted when we are busy with work in the peaks of our working lives. However, equally important it is to be geared up for the sunset, when it is time to realise your dreams and retire rich. While earning is an important part of retiring rich, it is even more important to be smart in investing in the best Pension plan that would get you on the road to riches.

The role of the Pension Policy has come into focus, given the increasing life expectancy in India and the rising costs of living associated with inflationary pressures. With there being a wide range of options available to invest your money in, retirement planning is all about investment returns, helping you take charge of life as you get set to relax after having a run at it.

As is always the case, it pays to plan well of your retirement age. Pension plans involve investing small and regular amounts of money into securities that are approved and strictly monitored by the IRDA, the Insurance Regulatory and Development Authority. This is known as the accumulation phase, where the amounts that you invest in pension plans tend to get accumulated for the payout that you plan for in your retirement age. You could choose the number of years that plan to spread your accumulation phase over, giving you flexibility in your retirement planning in line with your earnings, plans, and circumstances.

Alternatively, there is also the option of immediate annuity, where you could reap the benefits of your pension policy by investing a lump sum amount. This is another form of retirement planning that lets you get returns on a regular basis on the amount invested in one shot.

Technically speaking, the period that you start getting the investment returns out of your retirement plans is called the vesting age. This period is marked by regular payouts, though you may not be able to withdraw any of your invested amounts. The next phase in pension plan is the Annuity phase – this phase allows you to withdraw as much as one third of your invested amount, while the rest of your investment plan is used to pay your pension.

You could see how you could use your hard earned earnings to get investment returns in your retirement age – whether it is rising costs, medical expenses, or general living expenses, you do not have to deal with uncertainties of the future when you invest in pension policy. This way, you ensure that you are well poised for the stage of life that is all about freedom and choice. Ultimately, the best pension plan is one that gives you peace of mind with minimal risks involved, while maximising your investment returns.