For many people, retirement planning, as necessary as it is, does not seem important until they are only a few years away from leaving their professional life behind. But a retirement plan, and a well-planned one at that, is a must if you want to ensure a comfortable life for yourself and your family.
Your retirement is, undoubtedly, a golden period, but there are several considerations a retired individual has that may not be a major concern for a full-time working professional. For instance, prior to your retirement, you may not have had to worry about a regular monthly income; however, the same concern may bother a retired person.
5 Benefits of Retirement Planning
Make concrete decisions
Though many people tend to make last-minute arrangements for their retirement, the benefits of retirement planning include being able to create savings and investments as per your goals. Suppose you have a certain financial obligation to be fulfilled 5 years after your retirement; you can create an investment for the same a few years before your retirement.
Likewise, for the long-term goals for yourself and your family, you can plan the savings earlier, for instance, 10-15 years in advance. Early retirement planning also lets you consider all your options before you choose a suitable retirement plan for your needs. This also lets you gauge whether your risk profile will be the same after a few years or whether it will change.
Based on these factors, retirement planning can get you to create actual plans that chart out your goals and obligations over the years. If needed, you can also add some more savings to your portfolio.
Create Emergency Fund
One of the biggest benefits of retirement planning is the creation of an emergency fund. While one must have a life insurance plan to safeguard their family, an emergency fund can be quite flexible for meeting various needs.
As you age, your health may not be the same as it was 10 years ago. During the retirement years, many other familial obligations can also cause stress. And for good quality healthcare, you will need to have enough financial resources. An emergency fund, planned well in advance, can help you and your family out.
Apart from medical emergencies, should there be any pending loans and debts to be repaid, you can plan to set aside some portion of the emergency funds to pay off these debts. However, this is only possible if you carefully segregate the emergency fund. After all, the very purpose of having an emergency fund is to get financial assistance in trying times.
No one likes having to worry about money and how they can carry on over the next few months. In fact, you may have spent your professional years concerned about your monthly bills and various other essential expenses. But this problem should not affect you during your golden years. And to ensure that you don’t overthink your expenses, be sure to plan your retirement properly.
For instance, if you are already suffering from some minor health issues stemming from stress, a well-planned retirement fund can help you take steps to curb these issues. You can sign up for Yoga classes, go on small detox vacations with your family outside the city and plan your days better when you don’t have financial concerns.
And this is not only for you but also for your family; instead of your spouse or children having to struggle for extra finances, your retirement plan can provide for them as well so that they too can have a stress-free life.
Earn Regular Income
The smallest of bills and fees in any household ultimately lead up to the biggest expenses on your list. And no one likes not having enough money to spare by the time these bills have been paid. But a retirement plan that offers a fixed monthly income can take care of these expenses and even the education or course fees of your children.
When you are earning, a full salary can cover many bills and costs, but during retirement, you will need to have a monthly income that can replace at least half of your monthly salary. Therefore, you need a retirement plan with a regular income to help you out. TATA AIA plans offer the flexibility of planning your retirement goals as per your and your family’s needs.
Moreover, the aim of retirement plans is to ensure that you do not need to lead a hand-to-mouth existence each month. By planning your retirement properly, you can calculate how much monthly income you will need and choose a retirement plan accordingly.
Save for Future Goals
Everyone likes making plans after retirement, especially if it involves going on a vacation with your family. But travelling and getting good quality accommodation can be expensive, even if you are travelling within the country. Hence, many people start planning and saving for their post-retirement vacation well in advance. You can choose a savings plan or investment plan apart from your retirement plan if you intend to save enough money for leisure and travel.
Apart from travelling, you may also want to invest in a long-term hobby such as pottery, craft or start a small venture, not only to keep yourself occupied but also to have some extra income. By making your retirement plan well in advance, you can also time your investments and savings with the goals of your family members. For instance, if your child wants to study abroad, a retirement plan with a good investment amount can easily cover that.
Why is Life Insurance Important for Retirement Planning?
Life insurance can be an important part of retirement planning because it can provide a source of income for your loved ones if you pass away during your retirement years. It can help to ensure that your loved ones are not left with a financial burden. Additionally, some types of life insurance, such as whole life insurance, can accumulate cash value over time, which can be used as a source of savings for retirement.
Some of the key ways that life insurance can be important for retirement include:
- Income replacement: If you pass away during your retirement years, life insurance can provide a source of income for your loved ones to help them cover living expenses and maintain their standard of living.
- Leave a legacy: Life insurance can be used to leave a financial legacy to your beneficiaries or to a charitable organisation. You can also ensure a steady retirement fund for your spouse during their retirement years.
- Provide for loved ones with special needs: Life insurance can be used to provide for loved ones with special needs, such as children or grandchildren with disabilities, to ensure they have the financial resources they need for their care.
This is why life insurance is considered as an important part of a comprehensive retirement plan that also includes savings, and other financial strategies.
More than having a retirement plan that will offer a regular income to you during your golden years, it is more important to be able to plan your retirement well. The aim of having a retirement plan is so you can cover the various financial goals and obligations that come up during your retirement. And unless you create a well-structured plan for the same, it can get difficult to manage your expenses even with a good retirement or pension plan.