Retirement Plan – How to Save Money for Retirement in India?

Retirement plans are specifically designed investment plans that allow you to save for retirement in a systematic and disciplined manner. You contribute a set amount of money to the plan regularly so that by the time you retire, the plan has amassed a sizable corpus of funds. Retirement plans frequently offer both wealth accumulation and insurance coverage.

When you begin your earning journey, you are almost certainly full of hope for the future. Planning for retirement is probably the furthest thing from your mind now. However, as you age, you begin fantasizing about when you can hang your boots, turn off the alarm clock, and enjoy life at your leisure. This is the time to start thinking about retirement. This is also the point at which you realize you’re already late for the retirement party.

Here are a few retirement plan tricks you can utilize.

Save More than you Need

We must have a general idea of our income needs after retirement at the time of retirement, if not earlier. Generally, being cautious and planning for more than we may require is preferable. It is critical to begin with an estimate of all expenses. People believe they only require about 70% of their last drawn income. However, it is prudent to assume that they will need additional funds.

The Earlier – the Better

If we use the 4% rule as a guideline and want to withdraw Rs 1 lakh monthly after retirement, our investment corpus must be at least Rs. 3 crore. As with any investment, the earlier we begin investing, the higher the yields. Generally, we should begin retirement planning and building a retirement investment portfolio as early as our twenties. Compound interest in our early investments adds up to large multiples. However, if we did not begin investing at a young age, we would need to invest significantly more to reach the Rs 3 crore target.

Reverse Mortgage

Another option for generating real estate income is using a reverse mortgage. In India, reverse mortgages are not widely used. However, it is a viable option for generating revenue.

Take Advantage of the Senior Citizen Saving Scheme

SBI, for example, has an investment scheme for senior citizens. This account is available to seniors over 60, with an investment limit of Rs 15 lakh and an interest rate of 8.6%. The scheme is tax-exempt under Section 80C of the Income Tax Act. Even though the interest earned is taxable, the scheme provides one of the highest interest rates.

Utilize the Post Office’s Monthly Income Scheme

This investment scheme provides a guaranteed annual return of 7.7%, a monthly fixed income, keeps the initial capital intact, and outperforms other debt instruments. The scheme also includes a recurring deposit into which the earnings can be deposited. This expedites the savings process. The maturation period is five years. This scheme has no TDS, but the interest earned is taxable. The scheme is ineligible for tax breaks under Section 80C of the Income Tax Act.

Take Some Risks with Mutual Funds

Investing in mutual funds is also a good idea. These investments have greater liquidity and provide the investor with a consistent income. They are less risky than investing in the primary market while still providing good returns on investment.

Use the National Pension Scheme

Seniors should also invest in the National Pension Fund – it is stable and risk-free with guaranteed returns. When you look at the National pension scheme details,, it will indeed appear as one of the best schemes for a long-term investment.

Start Investing in Senior Living Communities

It is well-known that the cost of living rises as we age, especially after retirement. Hiring caregivers, higher healthcare costs, physiotherapy, security, and lifestyle services may all contribute to increased living costs.

As a result, it is prudent to invest in a senior living community. The resources and costs of a senior living community are shared by the entire community. As a result, compared to living alone, it is easier to live a healthier lifestyle. Furthermore, providing healthcare facilities, quality housekeeping, chef-prepared meals, curated wellness programs, and sports and recreation facilities would be difficult for an individual to financially support.

Invest in Real Estate

Owning property and leasing it to earn a rental yield is one of the best ways to create a guaranteed income stream. The rental income is higher when there are multiple assets. Many seniors rent out their homes and relocate to a senior care community. Because rents rise yearly, this income also helps you stay ahead of inflation. As a result, it is prudent to invest in real estate when we are younger to create a steady and guaranteed income stream. Furthermore, we can sell real estate assets and generate an additional corpus for investment.

Conclusion

Retirement can be scary, especially when you feel like you will not be working and will not be independent, but it would not be the same if you used the right strategies and thought about your retirement plan promptly.