Saving for retirement might not sound like a necessity, especially when you’re still at a young age and have recently started your professional journey. However, it’s one of the financial activities that people often wish to start sooner in their lives.
For the majority of people, the provident fund provided by their organizations is simply not enough to cover expenses after retirement. To reach your retirement period in a great financial position, you may want to consider investing in a pension plan.
While the idea of setting aside a significant amount of money with no intentions of utilizing it for at least a decade might not sound like something you may want to do, it’s necessary if you want to live a comfortable post-retirement life.
Keep in mind that it’s never too early to get started with retirement planning. With the power of compound growth, you can make the most of the available time and generate a sizable corpus for your retirement.
Moreover, even if you’re at an old age, you need not worry about not being able to accumulate enough retirement income. Although you lost the most important component of retirement planning – time – you can still think of ways to reduce your financial obligations in your retirement.
With that said, this article aims to provide you with insights on pension plans and best practices to make the most of them. Moreover, we’ll also be discussing some of the best pension plans in India so make sure you stick around.
What is a Pension Plan?
Pension plans are specialized investment policies that help you accumulate a part of your monthly income for a predetermined time, which can be used to help you to fulfil your financial requirements and day-to-day expenses after retirement.
These plans ensure a steady flow of income after you’re no longer working and are considered important even if you already have a considerable amount of savings available at your disposal because you may never know what happens next.
By making consistent savings in a pension plan, you can harness the miracle of compounding that helps grow your capital and generate a sizable corpus. There are several pension plans available in the market with ranging features and benefits.
At What Age Should You Consider Buying a Retirement Plan?
If you want to make sure that you live a financially free and comfortable life after your retirement, there is no such thing as the best time to purchase a pension plan. The earlier you purchase it, the more you can make out of the compounding effect on your accumulated funds.
In case you are in your twenties, you have a golden time to invest in a pension plan as by the age you retire, you will have a huge amount to fulfil all your dreams and aspirations in life. It will act as a foundation for your investment.
On the other hand, if you have reached your forties, consider this as an alert to start planning for your retirement. The average retirement age of Indians is 60 years, which means you still have twenty more years to accumulate funds for your retirement.
While it can be a bit complex to arrange constant funds as you have a family to take care of and a table to put food on, you should consider being conservative with your future expenses and keeping yourself invested in an adequate pension plan.
Now in the worst case, if you are thinking of investing in a pension plan while you are in your 50s, there’s only one thing to say – better late than never. Maybe you had certain financial obligations that prevented you from investing at an early age, but don’t let it stop you from doing it now.
Best Pension Plans in India
The LIC Jeevan Akshay 6 Plan
The LIC Jeevan Akshay 6 policy plan is an immediate annuity plan that begins paying you a monthly pension once you have paid a lump sum amount as a single premium. Unlike most other plans, you can collect monthly payments from this one without having to undergo a medical exam.
Moreover, you can choose to receive the pension or annuity payment as per your convenience on monthly, yearly, quarterly, or half-yearly terms. There’s even no maximum limit on the purchase price and annuity of this plan.
Canara HSBC Oriental Bank Of Commerce Pension4Life Plan
The Pension4Life plan by Canara HSBC Oriental Bank Of Commerce is one of the best pension plans in India that allow you to arrange a regular income stream in your retirement days. The plan is essentially an annuity product, which means you will receive a prespecified level of annuity instalments in return for the purchase price.
The plan allows you to choose from seven different plan options and credits the annuity income directly to your bank account. You can also choose to receive regular payments as long as you or your spouse are alive.
SBI Life Saral Pension Plan
The Life Saral Pension plan offered by SBI Life Insurance is a participating, non-linked, individual, and traditional pension plan that keeps your principal capital safe from the volatile conditions of the market and helps you accumulate funds for your retirement.
With this plan, you can gain guaranteed bonuses for the first five years of your policy tenure at a standard 2.50% of the sum assured for the first three years that later increases to 2.75% for the rest of the two years of your policy.
Conclusion: Figuring out how and when to start saving for retirement can be a daunting task. One question we often see is, “At what age should I start thinking about buying retirement plans?” Luckily, this decision isn’t as complex as it may seem at first glance.
To help you decide when the right time is to begin investing in your future, we’ve put together some information on deciding when to invest in the best pension plans in india.