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How to Plan for Retirement According to Your Age?

27-07-2022 |

Retirement is one of the most peaceful and interesting phases in every individual's life. It will help you lead a comfortable life if you have planned for your finances at the right age. The earlier you start planning for retirement, the higher the benefits. There are different types of retirement pension plans that help you save for your retirement. Choosing the right pension plan based on your age will secure your future. Here is a retirement planning guide to help you plan for the future.



Retirement Planning Guide Based on Age



Every individual's financial life depends on individual and family commitments. Therefore, the initiatives taken at different stages in life for retirement needs will vary based on age. Here is a detail to help you best in this regard.

 

  • When you are in your 20s - You will have completed your education and started your career in your 20s. You will have fewer family commitments at this time of your life. Therefore, you can devise your retirement plan based on the following pointers.

    • Save more - When you start your career and have fewer commitments, you can save more from your earnings. Also, when you learn to allocate a higher fund for your retirement needs early in life, you will develop the discipline to regularly save a fund towards a retirement pension plan.

    • Choose long-term plans - It is always said the longer you invest, the higher the returns. Therefore, in your 20s, you can choose retirement plans with a longer-term, such as for 40 years, to accumulate a huge retirement corpus.

  • When you are in your 30s - When you are in your early 30s, you must have started your married life. After your marriage, your family commitments will certainly increase. Therefore, a retirement pension plan should be able to accommodate such expenses. The following pointers will help you strategise well for the pension plan in your 30s.

    • Make a budget - When you plan for retirement, the best way to start is to focus on a budget. Make a note of your different sources of income and expenses. Allocate a fund for every expense, such as your routine, groceries, entertainment, travel, school fees, etc. When you set aside these expenses, make sure you allocate a fund for your retirement. Choose a fund that is comfortable for you to invest in the long term.

    • Make a financial plan based on short-term and long-term commitments - Based on the budget, make a long-term financial plan. Include planning funds to suffice for the short-term and long-term commitments. For example, a short-term fund can be for a medical emergency, and a long-term fund can pay for children's higher education.

    • Decide policy tenure based on life expectancy - You can decide on life expectancy based on your family's medical history. Based on this life expectancy, decide on the policy tenure.

  • When you are in your 40s - It is the right retirement planning age. This age is considered ideal because you would have had an idea about your steady flow of income and the extent of expenses based on your lifestyle. Here is how you can focus on the retirement pension plan at this age.

    • Revise your expenditure and financial plan - Now that you have realised your standard of living, you can revise your financial plan. You can increase or decrease the extent of funds invested for your retirement pension plan. For example, if you feel you are spending money on unnecessary things, you can reduce it and save more. Also, as you get older, you must focus on your unexpected medical needs that can arise at any time.

    • Stay invested - With the increasing commitments and cost of living, you might slow down or stop investing in your retirement pension plan. It can lead to difficult financial conditions that can affect your retirement. Also, your hard-earned finances saved until then will go in vain.

  • When you are in your 50s - Being in your 50s and starting to invest in a retirement pension plan is late. However, it is better late than never. Based on the individual financial condition, you can decide on the extent of funds you can invest in the pension plan.

For example, suppose you have completed paying for all your family financial commitments, such as your child's education, marriage, etc. In that case, you can invest a slightly higher proportion of your income into the pension plan. You can save this fund until you retire. At the end of retirement, you can invest the accumulated fund in an annuity plan to receive a regular income until death.

There are different types of retirement plans. For example, when you invest in Tata AIA insurance, you can choose to invest in retirement plans that combine life cover and retirement benefits. Also, you can choose between the immediate and the deferred annuity plans. The immediate annuity plan will start providing a regular income immediately after you purchase the retirement plan. On the other hand, a deferred annuity plan starts providing regular income starting from a later date.



Conclusion

Purchasing a retirement pension plan to save funds to suffice for the financial needs after retirement is an important need. The earlier you start investing in the retirement plan, the greater the benefits. However, you can start investing at any age based on your family's financial commitments. Therefore, the steps you take to invest in the retirement pension plan and the strategies you adopt will vary. So, based on your age and family financial commitments, decide on a financial plan that will help secure your finances post-retirement.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Frequently Asked Questions

Does investing in a retirement pension plan have a tax* advantage?

Yes, when you invest in a retirement pension or annuity plan provided by a life insurance provider, your gross income will qualify for a tax* deduction under Section 80CCC.

Which is the right retirement planning age and why?

The right age to plan for your retirement is between 30 and 40 years of age. You will have clarity of your family's financial commitments at that age and can plan better.

Disclaimers

  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.