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What is Retirement Planning? A Complete Guide to Help You Make Wise Decisions

21-07-2022 |

Retirement financial planning should be a priority in every individual's life. It will help you save funds in the long term that can provide a regular income after retirement. Planning it early and investing in appropriate funds will secure your future and help you accomplish your financial goals timely. It can also aid in managing health-related emergencies. So, how do you go about doing retirement planning? Where and how to start? What are the possible investment options? Here is a detail to help you out! So, let us get started right away.



What is Retirement Planning?

Retirement planning focuses on a financial plan that can help create a fund to manage the expenses and liabilities after your retirement. It is a strategy that can aid in saving, spending and investing wisely.

 

One of the ways to do retirement planning is to invest in pension plans. A pension plan will have two phases: accumulation and vesting. During the accumulation phase, you should regularly allocate a specific fund to the pension fund. And, on maturity, during the vesting phase, the pension fund will provide a regular income in the form of a pension until death or a defined income period. There are different types of pension plans, such as government-sponsored pension plans, life insurance pension plans and annuity plans, etc.



Why is Retirement Planning Important?

Retirement planning is considered important for several reasons. Here are a few to mention:

  • Direct your income to secure your retirement life - When you start earning in life, you will find ways to spend money for your wants and desires. It will help you lead a happy and satisfying life. However, it can end up leading to stressful retirement life. Therefore, before you exhaust your earnings, you must allocate a specific fund for retirement investment to secure your financial status after retirement.

  • Peaceful retirement life - When you have sufficient funds to manage your expenses regularly, and during an emergency after retirement, you can spend your relaxing retirement life in peace. It can help you live stress-free, independent and enjoy every moment with your family.

  • Manage medical expenses independently - Health-related issues can strike your financial stability any time after retirement as you get older. Planning to meet such expenses independently can help you pay for the expenses and recover quickly.

  • Tax* benefits - When you invest in a retirement plan, you accumulate a large corpus to spend after your retirement while also saving on tax. The premium you pay for a retirement pension plan will qualify for a tax deduction under Section 80C of the Income Tax Act, 1961.


How to Plan for Retirement?

Retirement planning is a simple task when you get it right. Here are a few steps that can help you best in this regard.

  • Analyse your different sources of income and make a list of your current expenses.

  • Allocate funds, make a budget based on the required expenses, and ensure you have sufficient funds to invest in a retirement policy.

  • Follow the budget religiously. Ensure to keep aside a specific fund to manage an emergency.

  • Discuss with your family and estimate the funds required to meet everyday expenses after retirement based on your current lifestyle. Also, analyse your long term commitments such as planning for your child's marriage, repaying housing loan, etc.,

  • Based on the above calculation, invest in a retirement plan that can help you handle the expenses comfortably.

  • Start investing early in life so that you can choose a longer policy term to accumulate a large retirement corpus effortlessly.

  • Choose your retirement plan wisely. Research across different retirement policy options, understand their features, compare the cost and choose the best affordable option that will satisfy your financial needs in the long term.


What Can be a Good Retirement Investment Plan?


A good retirement plan for your financial needs can be based on the following features:

 

  • Affordable

  • Provide sufficient pay out benefits to satisfy retirement expenses

  • Convenient to invest in the long term

  • Cost-effective

  • Offer customisable features

  • Applicable for tax benefits

 

At Tata AIA Life, we offer different retirement solutions with varied, flexible features that help you manage funds for leading a peaceful retirement life. For example, our Tata AIA retirement policy can allow you to invest your hard-earned retirement corpus as a lump sum and choose the immediate annuity plan benefit to start receiving the regular income immediately after investing.

There are also comprehensive life insurance plans that provide a life cover and a guaranteed1 return on maturity. You can choose to receive the guaranteed1 return as a monthly income for a defined income period or whole life until death. In addition, there are flexible premium payment options that help you customise the product based on your steady flow of income and financial needs. We also offer online retirement plan options making it convenient and cost-effective to invest long-term.



Conclusion

Retirement planning is a crucial financial activity. It is essential to lead a happy and peaceful life. Retirement plans for individuals can provide the required benefits if chosen and invested right! Understanding your financial requirements, evaluating your income, comparing different solutions and choosing the most affordable option will seem beneficial.

When investing in a retirement policy, try to do it early in life to make it comfortable to invest, develop the habit of saving regularly and choose a longer-term to accumulate a large fund. Retirement plans can offer tax benefits that can help you save a lot of money during the investment period. Therefore, choose a good retirement policy and stay invested to benefit maximally!

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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!

View all posts by Tata AIA Life Insurance

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.

  • #Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office.

  • *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