Planning for retirement is top most priority for most of the individuals in today’s age of higher life expectancy and increased cost of living. Following are some pointers to get more results out of your best retirement plans.
Planning early: The earlier you plan for retirement, more is the money available at your disposal during your retirement. Earlier refers to a period any time after you start earning money.
Inclusion of equity: In addition to options like bonds, real estate, gold, fixed deposits it is essential to include equities while you plan your retirement portfolio. This can be done by including either stocks, equity funds or unit-linked pension plans in your portfolio.
Diversification is the key: Do not rest alone on equities; ensure that you have a diversified retirement portfolio. Include varied assets besides equity in specific weightages so that it will enable you to fulfill your post-retirement expectations.
Do not rest on PPF alone: Mindsets of most individuals are fixated on PPF; they feel that investing in PPF will take care of their retirement plans. But this is not so. The current rate of interest on PPF is about 7.6% and if the inflation rate for the long term is considered as nearing 6% then imagine the net income you will make on your PPF savings.
Decide on age of bestowment: Decide on the age of your retirement or when do you require the inflow of the income stream to start? If you want to go for an early retirement you have to choose a corresponding plan that will generate an income stream, say on your reaching 50 years or so.
Cost-effectiveness: The more you pay towards expenses on your retirement plan lesser is the money left towards savings. It is essential to compare expenses between different plans and opt for a cost-effective one.
Consideration of annuity options: Annuity options offered by the retirement plan should be in accordance with your requirements. Annuity is received for specific years under the life-time option irrespective of whether the policy holder exists or not whereas the last survivor/joint life annuity offers pension during the life of the policy holder and post death provides it to the spouse.
Planning for retirement is a complex business and it is best left into the hands of an expert financial planner!