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What are the Advantages of In-depth Retirement Planning?

One of the reasons why we work hard throughout our lives is that we wish to accumulate sufficient savings to fulfil our post-retirement financial needs without a reduction in our lifestyle. Therefore, planning for your retirement is an important aspect of having a financially disciplined life.
 

In this context, there are many pension schemes that can help you financially prepare for your retirement. Choosing the adequate pension plan for yourself at an early age, say in your thirties, goes a long way towards providing you a headstart in the efficient execution of your retirement planning goals.
 

What is a Retirement Plan?
 



A retirement plan is a plan that is drawn to ascertain and list your post-retirement financial goals and financial requirements along with the financial planning necessary for the successful and timely accomplishment of the said goals. The main elements of a retirement plan have been listed below.
 

  1. The prospective sources of income after your retirement, including pension and return on investments
  2. The expected post-retirement expenditure, including monthly expenses of the household and contingency expenses
  3. Maintenance expenses on the assets and liabilities you have to manage after your retirement and their impact on your income and expenditure
  4. Medical expenses that are not covered by a health insurance policy
  5. A savings plan or pension plan in alignment with your post-retirement financial needs and sources of income

 

Out of the several retirement plans available in India, you can go for life insurance-cum-savings plans that offer assured returns on investments, choice of opting for a regular income upon retirement and an extensive life cover.
 

The TATA AIA retirement investment plan- is a comprehensive savings insurance plan that comprises the dual benefits of a life cover and a guaranteed1 income that can help you finance your post-retirement life. 

The Benefits of Retirement Planning
 

Planning for the future is not only financially prudent but also helps you optimise your savings and investments. In this context, there is a wide selection of pension plans that you can choose from and avail pension benefits post-retirement. There are several reasons why retirement planning is beneficial for you, some of which have been discussed below.
 

  1. Preparation for the future


    One of the most significant benefits of retirement planning is that it enables you to make plans and prepare yourself for the future. Ascertaining your potential sources of income and heads of expenditure provides you clarity as to the funds you will require after retirement, the funds you will have, and the estimated gap between the two. Determining this gap is pivotal to drawing or choosing an adequate retirement plan. For instance, if you run your own business and expect to have a steady stream of income from it even after a certain age when you propose to retire, you can ascertain whether that income will be sufficient to meet your financial needs after retirement or if you will need additional income through, say, a pension plan.
     

  2. Starting investment at an early age


    A majority of people procrastinate their retirement planning, thereby losing precious time and returns on their savings. Therefore, it is always advisable to start making plans for your finances post-retirement at a relatively early stage in your earning life, preferably in your thirties. The sooner you determine the components of retirement planning, the better placed you will be to accumulate a substantial corpus in a time-efficient manner. There are many benefits of beginning your retirement planning early, some of which have been listed below.
     

    • The flexibility of starting with a small investment and gradually enhancing its magnitude
    • The option to move between savings schemes to earn higher returns
    • The benefit of the compounding of your investment for a long period
    • The freedom to set aside a larger proportion of your income towards your retirement plan owing to fewer family-related responsibilities at a younger age
    • The advantage of inculcating financial discipline from an early stage in your life
       
  3. Optimum investment avenue for your savings


    Another important benefit of retirement planning is that it is a relatively risk-free investment, albeit one that can help you build an adequate retirement corpus. Rather than investing in risky and volatile investment avenues, you can safely park your savings in a systematic and safe retirement plan and be assured of a financially secure life after retiring from your professional duties.
     

  4. Planning for contingencies


    Retirement planning also enables you to effectively plan for contingency situations, such as a critical illness in the family or an accident. It is worth noting here that most pension schemes comprise the option to add additional features to help you manage the aforementioned contingencies. The Monthly Income of TATA AIA , for instance, enables you to choose add-on benefits such as an accidental death insurance cover and a waiver of premium, thereby giving you the opportunity to make your plan more comprehensive. Furthermore, you can also avail a loan against your pension plan if you are in urgent need of funds.
     

  5. Securing your family’s future


    By investing in a retirement plan, you can ensure the safety of your family’s financial future. Since most retirement plans offer the feature of monthly income, your family can have an assured and regular source of income even after your retirement. Furthermore, the life insurance cover included in a majority of pension plans provides you life cover and added security for your family in the unfortunate event of your passing.
     

  6. Tax* benefits


    A retirement plan also entails some tax* benefits for the investor. In this context, Section 80C of the Income Tax Act, 1961 allows you to enjoy a tax* deduction to the tune of ₹1,50,000 on the premium amount paid for all life insurance plans and a pension plan with a life cover is no exception. Furthermore, the proceeds from the plan are exempt from income tax* under Section 10 (10D) of the Act. Therefore, there are substantial tax* benefits associated with a pension plan.

  7. Conclusion
     

    Retirement planning is a responsible and necessary aspect of your life and one which you must not neglect or procrastinate. By choosing the adequate pension plan, you can enjoy the benefit of a safe avenue for your savings, tax* benefits, a life insurance cover, and assured financial security for your family in the future. Therefore, the importance of retirement planning cannot be overstated; you must start your retirement planning at an early stage of your professional life. 

    L&C/Advt/2023/Feb/0529

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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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Disclaimer

  • 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.
  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry