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3 Tips to Buy the Right Retirement Plan

Nov 13, 2019 | 5 months ago | Read Time: 3 minutes | By iKnowledge Team

How would you want your retired life to be? Do you have a vision of your life post-retirement? If yes, you wouldn’t want that vision to remain a dream because of the want of money, would you? As an individual, you have every right to live your post-retirement life happily, healthily and with all the time and money in the world to pursue your passions. Hence, retirement planning should be one of the key objectives of your financial plan.

Most of the salaried individuals don’t take their retirement plans seriously, because they think that their PFs will help them meet their financial commitments post-retirement. Do you feel your PF is good enough to give wings to the dreams that you want to pursue after your retirement? If yes, you need to shed this thought right away. Provident Funds alone are not sufficient to meet your post-retirement financial needs. You need the support of other savings and investment needs to fund your retirement needs.

Here are 3 tips to help you choose the right retirement plans.

  • When do you plan to start?

Are you planning for your retirement when you are in your 20s or 40s? This question plays a vital role in deciding the type of retirement plan that would work for you. For example, Mr. Anil, 25, wants to retire when he is 45 years old. He wants to go on a world tour and start his own consultancy after his retirement. After using a retirement calculator, he has concluded that he will need around Rs.1 crore as a retirement corpus to live a peaceful retired life. He also knows that he needs to save around Rs. 42,000 every month for the next 20 years, to build that corpus.

Mr. Anil can now think of a long-term investment-cum-insurance plan to invest his monthly savings as he knows that he has a long window of 20 years to build his retirement corpus. He can choose a diversified investment plan of bank deposits, annuity plans with periodic pay-outs, ULIPs and more. On the other hand, if Mr. Anil had started to plan for his retirement only when he was 40 years old, he would have had only five years more to meet his huge retirement corpus.

He must choose a ULIP that invests almost entirely in equity (but also comes with a huge risk) because, that’s the only way, he can at least try to come close to the massive corpus that he would need to lead a happy retired life.

  • Payments and payouts

How much premium can you pay and what type of payout do you prefer? Your choice of retirement plan will depend on these questions. If you want the benefits of a ULIP-based retirement plan, you must be ready for single premium payments. All the ULIP plans for retirement are single premiums only. This means you must pay a lump sum premium only once at the beginning. These plans are great if you plan to stay invested for the long-term, as the compounded rate of return on your single payment will fetch you handsome returns, post-retirement.

The other point you must remember while choosing annuity plans is the type of payouts that you would like to receive and the frequency for the same.

  • General tips to remember

The retirement plans that you make should always consider the inflation factor so that you can sustain the same lifestyle as before, even after you have retired. You should include insurance for yourself and your spouse, an important part of your retirement plans. If you are starting early, apart from high-return investments and ULIPs, choose plans that provide you a guaranteed income after your retirement. This will give you financial stability at a time when you need it the most.

Have a proper retirement plan in place and choose investments accordingly so that you can implement your plan effectively. Save as early as you can so that you can diversify your investments and get good returns post-retirement. To know about Aegon Life’s life insurance products like term insurance and other products, visit our home page.


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