At a young age, your primary focus can be your career. During your active working years, you might work hard every passing day to achieve your career goals at a young age. When you aim to strengthen your career, retirement might be the last thing on your mind. Since retirement might seem miles away, you might delay the retirement planning process to the later phase of your life.
A retirement plan can be a long process. Since it can take a lot of time, you should begin retirement planning at a young age. When you plan early, you get more time in your hands to reach your retirement goal in the future. As an aspiring retiree, you should start saving as well as investing when you are young to live a comfortable life after retirement.
Many of you might believe that savings can allow you to live a stress-free retirement period. According to a survey, 59% of the Indians are habitual savers. Therefore, you might save a specific proportion of your income every month and park your hard-earned money in savings plans. When you deposit your earnings under a savings, you can achieve your short-term goals with ease. In addition to this, you can receive the following retirement benefits given below after parking your money in a savings plan:
- You can customize the selected savings plan based on your financial goals, risk appetite, and needs of your loved ones.
- You can effortlessly develop financial discipline.
- You can be able to generate wealth to meet your financial goals in the future.
- You can receive tax benefits to reduce your tax liability.
Although savings can be crucial, investing can help you to grow your accumulated wealth in the long run. Moreover, it can allow you to gain returns on your investments. When you choose the right type of investment tool, you can not only receive retirement benefits but also reach your post-retirement goals faster. Therefore, let’s go through the different type of investment tools given below that can help you to lead a comfortable lifestyle after retirement:
- Unit Linked Insurance Plan (ULIP)
A ULIP plan is a dual-benefit financial product, which can combine insurance and investment under a single integrated plan. Although a ULIP plan can be beneficial at any stage, you can receive relatively high benefits at a young age. In addition to this, you can afford to invest in equity funds of a ULIP plan since you might have fewer financial responsibilities when you are young. An equity investment can allow you to receive high returns based on market performance.
When you select a ULIP policy, you can diversify your investment portfolio. The switching feature of a ULIP policy can let you shift between funds to secure your invested capital from the market volatility. With the switching feature, you can park your funds in the debt funds when the market is down. When the market rises, you can go back to equity funds to receive better returns than debt funds.
- Endowment Plan
The risk appetite of every investor can vary between high to low. However, there can be specific investors who might not be willing to risk their money in the capital market at any cost. If you are unable to bear the market risk, you should purchase an endowment plan. It is a non-linked market product that works solely on the savings component.
When you buy an endowment plan, you have to pay the premium regularly to receive the coverage. The premium that you pay towards the endowment policy can be invested in debt instruments. In addition to this, you can obtain a guaranteed lump-sum pay-out at the maturity date of the policy. An endowment plan is a tax-saving investment that can take care of the financial needs of your family in your absence.
To sum up, retirement can mark the beginning of the golden years of your life. After retirement, you might either aim to live a stress-free life or achieve your post-retirement goals like traveling, learning a new sport, starting a business venture and so forth. Since the flow of your professional income might stop after retirement, you might require adequate funds to achieve those goals.
Early retirement planning can help you to meet your post-retirement goals with an ample amount of resources in the future. While planning for retirement, you should purchase pension plans to provide financial assistance after your retirement. A pension plan can act as an income replacement that can secure you financially from the eventualities of life. Before choosing a pension plan, you should use a pension plan calculator to know how much money you require for retirement.