Are you confused about which is the best pension plan for you? Is it causing you trouble in your planning your future? Do not worry, we are here to solve your confusion and aid in making better choices.
What is a pension plan?
Pension plan offers the double advantage of investment and protection cover. By contributing a specific sum consistently towards your pension plan, you will aggregate an impressive total in a phase-by-phase way. This will guarantee a consistent progression of funds once you resign. Once you know what is a pension plan and its importance in life, it is crucial to choose the best one so you can plan your future appropriately.
How to choose the best pension plan
- Decide your retirement age: The most common age of retirement is 60 years but one can retire based on their personal choice.
- Think diversification: Equities are great, and so are FDs, bonds and gold. You need a portfolio with equities in it alongside different resources like fixed deposits and gold. These assets should be in a specific weightage or allotment. Together they structure a portfolio that can assist you with accomplishing post-retirement desires.
- PPF will not be enough: Many people go into retirement planning with an autopilot outlook. They contribute cash towards choices like PPF or EPF and accept they are set to resign in solace. This is a long way from reality, these choices are, best case scenarios. There is something else to be done as far as building a portfolio than just PPF. PPF or EPF will not be to the point of battling expansion.
- Vesting age: Go for a pension plan with a vesting age that matches your requirements. There are some annuity plans with a vesting age beginning at 40 years. So assuming you need an income stream early on in life, go for such an arrangement. Then again, there are plans with a vesting age of 85 years, which is reasonable assuming you intend to resign late.
- Higher sum assured: Go for a pension plan that gives out higher aggregate guaranteed on vesting and gathered rewards or guaranteed benefit.
- Assured death benefit: Prefer a plan with a minimum payment on death
- Financial planner: As retirement planning is a comprehensive exercise, looking for the help of a financial planner can go far. In any case, take care to choose a genuine, unprejudiced, and capable financial planner who will handhold in each progression to design your retirement.
- Flexibility To Increase Premium Amounts: Each individual is relied upon to begin saving from an early time of his vocation so by the end of the tenure he has an extraordinary corpus sum. Anyway, it is a lot conceivable that you began saving and contributing late so your corpus probably won’t record to an excessive amount of an aggregate. Many plans accompany the adaptability of expanding the premium amount so when you have a decent amount of cash, you can increase your premium which thus will expand your corpus.
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- Invest in a pension plan: After you have decided the retirement age, invest in a pension plan. Never delay in investing in a pension plan or you might have to compromise in your life. Investing early in life will empower you to amass the essential corpus needed and will also keep your peace of mind.
- Determine your requirement corpus: Firstly, ascertain your annual expenses. Keep aside that much money along with keeping in mind the market inflation. Draw a rough amount and invest the remaining in a pension plan that meets your post retirement requirement
- Calculate the future value of your current savings: After all your expenses the amount you keep aside plays a crucial role in building your retirement corpus. You need to figure out the future value of your savings. To decide this, you need to factor in the expected rate of profit from your investment. This is the worth of your reserve funds or investments at the hour of retirement.
- Cut down on unnecessary expenses: With your current savings if you are unable to reach your target then cut down on unnecessary expenses. Weigh your expenses in the need and want column. This is one of the easiest way to cut down on unnecessary expenses.
- Track and review your plan regularly: Your retirement plan should be checked at normal spans to ensure you are on track to meet your goals. Any progressions in the pay, costs, retirement age, and so on should be joined in the retirement plan.