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 on a regular basis 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 first 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 at this point. However, as you get older, you begin to fantasize about the day 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. As a general rule, it is preferable to be cautious and plan for more than we may require. It is critical, to begin with, an estimate of all expenses. People generally believe that 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 per month 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. As a general rule, 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 will need to invest significantly more to reach the Rs 3 crore target.
Reverse Mortgage
Another option for generating income from real estate is to use 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 the age of 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. Despite the fact that 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 a well-known fact 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 an increase in 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, 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. In fact, many seniors rent out their homes and relocate to a senior care community. Because rents rise every year, this type of income also helps you stay ahead of inflation. As a result, it is prudent to invest in real estate when we are younger in order to create a steady and guaranteed income stream. Furthermore, we can sell the real estate asset and generate an additional corpus for investment.
Conclusion
Retirement can be scary, especially when you feel like you would not be working and would not be independent – but it would not be the same if you use the right strategies and think retirement plan timely.
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