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Need for Retirement Plan

 

A retirement plan helps individuals to ensure to continue to earn a satisfying income and enjoy a comfortable lifestyle post retirement, even when he/she is no longer earning.

  • Increase in the standard of living: Prices of goods and services that we consume in our current lifestyle is increasing. Our lifestyle changes calls for increased expenses towards newer necessities. A retirement benefit plan provides a steady income every month, to arm the subscriber in the face of rising costs.

  • Longer retirement years: Average life span is expected to keep rising in India and hence, the retirement years are likely to be longer. With the rise in inflation higher monitory resources would be needed for living a comfortable life.

  • Change of social structures:Joint families are increasingly becoming rare, and one needs to be financially independent post 60 without having to depend on other family members. Independent lifestyle is sustainable only when backed with a financial cushion.

  • Shortfall in Employer Funded Pension/Pension Funds:The employer or government funded pension schemes are less likely to sustain the income needs post retirement. This is the reason many individuals worldwide supplement their state or employer funded retirement plans with self-funding- i.e. pension plans.

  • Invest now for financial security when you retire:Everyone dreams of amazing things to do after retirement. After working all your life, individuals have goals etched out to fulfil all their desires of pursuing hobbies, taking holidays, starting a business etc. Individuals who engage in retirement planning are better prepared upon arriving at their retirement age.

  • Tax Benefits:
    1. Exemption of Rs 50000 u/s 80 CCD(1B)
    2. Employer Contribution up to 10% of salary (Basic+DA) to NPS is exempt from tax under section 80CCD(2)

 

Why should one start planning for retirement early?

  • An early start means you will have to save a lot less to create the same corpus.

  • Apart from the benefit of a comfortable retirement, the subscriber can also enjoy tax benefits as he / she plans and invests for retirement as per prevailing tax laws.

  • Studies show that happiest retirees are those who have planned and saved the longest.

  • No matter how much they've saved, the early planners are the ones who escape the anxiety and regret of not having been more proactive.

  • The sooner you begin saving, the more time your money has to grow.

  • The longer you wait to start planning and saving, the greater the risk that you'll be struggling when you should be unwinding.
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