Most of the people principally those in their early stages of career think that their retirement is too far. True, they’ve years of work, before they would retire, however, it’s still important to begin planning for retirement.
Retirement planning refers to the process of planning for post-retirement life. It comprises of setting your financial as well as non-financial goals and planning ways to achieve the same. Financial goals are all how much you wish to save for your goals like at what age you wish to retire, where you wish to live, how much to save for retirement and so on.
What is a Good Retirement Plan?
Retirement Plan makes it easy for individuals to escape this economic conundrum. The company offers various retirement plans which help individuals in constructing a dependable pool of cash seeing them through their post-retirement.
Retirement Plan understands the goals of the individuals and helps them in making them come real. One need not wait till 60 for experiencing the perks of the retired life. These plans offer the freedom of selecting own retirement age.
The customer can also log into the company’s website, select the required plan, select the coverage and feed in the details. The premium would be calculated using the details provided. The customer can pay the premium online through with the help of debit card, credit card, or net banking facilities and policy would be issued.
Benefits of a Retirement Plan
A comfortable retired life is an outcome of proper planning. There are various benefits of retirement planning which range from financial to psychological and personal. Let’s look at some benefits of retirement planning:
- Quality of Life – Retirement planning is crucial for retaining financial independence and maintaining an easy and comfortable lifestyle after one stops working. After all, you want to keep living your best life as you age. When there’s no income flows to the bank account, it becomes difficult in maintaining the same quality of living as before.
- Tackling Unexpected Medical emergencies – No one can avoid uncertainties in life, however, if one has sufficient retirement fund for catering to unexpected healthcare expenses, dealing with them won’t seem difficult. Preparing oneself for such eventualities with a contingency fund provides a sense of financial freedom.
- Peace of Mind – This is one of the key benefits of retirement planning. Planning for your retirement ahead of time not just reduces the stress in the post-retirement life and also in the years leading up to it. Lack of planning could leave a cloud of uncertainty which could create a needless level of stress.
- Inflation – You cannot control inflation. Irrespective of your earnings, inflation eats up your hard-earned money. If you’re not able to handle the inflation with a decent job today, what would happen on retirement?
- Contextualize Pre-Retirement Decisions – If you’re taking time in planning your retirement early, you would be able to take efficient career-related and financial decisions prior to your retirement with proper planning. These decisions could be different for someone with twenty years to retirement compared to someone with five years to retirement.
Features of a Good Retirement Plan
There are several things must have in a good retirement plan . Some of the key features are described below:
- Vesting age –One should go for a pension plan with the vesting age which matches their needs. Some retirement plans offer vesting age starting as early as 40 years. So if you wish streams of income that early on in your life, you should go for such plans. Also, there are plans with the vesting age at 85 years, suitable for individuals planning to retire late.
- Payment period – It refers to the period in which the policyholder receives the pension after his retirement. Most of the retirement plans keep the payment period separate from the accumulation period.
- Assured death benefit – You should prefer a retirement plan offering a minimum payment on death – for instance, 100 percent of reimbursement of premiums.
- Expenses – You should look for a retirement plan where expenses or charges are competitive. You should keep in mind that the more money you lose towards charges, the less you would save towards your retirement. This requires a comparison of expenses among plans for identifying the most cost-effective plan.