Retirement planning is a necessary component of any comprehensive financial plan. As the average life expectancy increases, having a retirement plan becomes more important. Retirement planning offers a second source of income and helps people achieve their financial independence, as well as cope with medical emergencies and fulfil other life goals.
What is a Pension Plan?
A pension plan is a fund that you accumulate over the course of your life to ensure a steady income stream after retirement. It is an investment that increases as a result of consistent contributions and interest rates. So, it helps to secure a sizable fund for your retirement. You can also estimate the growth of your investment with the help of a compound interest calculator.
Pension plans often operate in a number of ways. An individual’s pension fund might be created by splitting the contributions with their company. In this situation, the employer is typically liable for a greater portion of the payment.
A person can also start a pension fund by contributing a specified sum each month. After which, the individual is eligible to receive the payments as an annuity following retirement. In order to determine which pension plan best meets your needs, it is essential to research the finest pension plans available in India. You can finally relax and accomplish your long-held goals during retirement.
Types of Retirement Plans
There are many different pension plans available in India, making it difficult to choose the ideal one. To aid you in making an informed choice, the compound interest calculator comes as a saviour. The following are a few of the plans that are covered in more detail:
- Deferred Annuity
The policyholder can create or build a corpus classified under the deferred annuity pension plan by making a monthly deposit or daily premium payments. As an outcome, they will accumulate a sizeable sum of money for a pension fund during the course of the scheme. Additionally, you can save money by availing tax benefits applicable to this type of pension plan.
- Immediate Annuity
Immediate annuity plans offer immediate or instant payment. You are required to make a lump sum deposit, post which you can start receiving annuities as a pension. You can choose the type of annuity plan you desire and the investment amount as per your financial goals.
- Annuity Specific
The policyholder receives the annuity under this type of pension plan for a defined or specific number of years, making it the finest pension plan in India. One can choose the payment tenure that works best for them. The fund is paid out to the nominee in case of the insured’s demise.
- National Pension Plan (NPS)
The Indian government offers retirees a number of pension options, including the National Pension Scheme. The pension plan allows employees to make monthly contributions to an account that will be paid out when they retire.
- Life Annuity
This type of pension plan continues for a lifetime; until the policyholder passes away, as the name would imply. If the policy has a “with spouse” option, the insured’s spouse will be eligible for the pension payout in the case of the insurer’s demise.
- Life Insurance in Retirement Plan
Such pension plans are a mix of life insurance and investments. The plans ensure that, in the event of the policyholder’s passing, their family will be given a lump sum payment. It’s critical to remember that the insurance payment amount under this sort of pension plan may be lesser than a stand-alone insurance plan.
It’s crucial to have enough money that can guarantee your financial independence in your golden years. Depending on your post-retirement aspirations and objectives, you might need the funds as a lump sum amount, a regular income, or both. Choose the finest retirement plan today to prepare for your golden years.