Many investors look forward to savings and investments for after retirement plans with the thought if not today then it’s never. Thinking about retirement is wise but choosing investment plans is not easy with the rising inflation and the many current needs. Some really think that the only way out is a retirement pension scheme.
If an investment plan is to be created the top most priorities should be to savings and investments for retirement. It’s never too early to start a retirement plan in fact prior planning for retirement is very crucial, meaningful and necessary.
Terms in Financial Planning
To make things simpler one needs to understand the two terms commonly used in financial planning.
- Accumulative phase: The phase where wealth is accumulated in regular monthly investment to accumulate a respectable corpus expected to bear the family needs during retirement. Earlier the start of accumulation period in life, more advantageous it would be. Pension is received later after retirement. So investment in Mutual funds, ULIP’s, or any such investment leads to this accumulative phase.
- Distributive phase: Here the transition period from work into retirement begins the withdrawal stage. The withdrawal of money per month at retirement or before that for utilization from the collected wealth or accumulated corpus is the distributive phase.
3 simple step or tips for Retirement planning
- Step1 Strategically plan expenses: Looking back it is noticed that fluctuating prices and inflation has shown a steep rise in the living standards and an ever increasing expenditure. It is ever on the increase and hence projecting expenses by assumption of a assertive inflation rate.
- Step 2 – Compute or determine the requisite Retirement Corpus: It is vital to compute the requisite retirement corpus. The percentage rate of interest on investment and rate of inflation the real rate of return is obtained which is normally utilized at the withdrawal stage of investments.
- Step 3 – Determine the requisite savings per year: Determine the requisite savings per year / the month of accumulation of the retirement corpus: Try investing in funds. Compute the amount to be accumulated during the work span and determine the saving requisite needed per month.
What is the Reliance Retirement Fund?
Reliance Retirement fund, pension scheme is a fund which can be invested in anytime, subscribed for and repurchased constantly that is without any interruption and with no tied up maturity period it is also known as an open ended fund. It is has investing in equity features and tax saving benefits under Sec. 80C of the Income Tax Act.
Benefits of this scheme?
Provide monetary and steady income growth to the investor in alignment with the retirement goals of the investor.
Investing in a mixture of securities consisting of fixed income securities, equity and other equity related implements.
Features of Reliance Smart Pension plan
| Type of Plan | Unit Linked Pension Plan |
| Term of Premium Payment | Minimum Ten years Maximum Thirty years |
| Policy Term | Minimum – Single pay 10 years Regular or Limited pay fifteen years Maximum – Thirty years |
| Annual Premium Payment | Regular Pay – twenty thousand Limited Pay – twenty four thousand Single Pay – fifty thousand Maximum – No limit |
| Frequency of Premium Paying | Monthly, quarterly, half yearly or Yearly |
| Switch between funds | Allowed |
| Withdrawal if any | Partial withdrawal of minimum Rs 10,000/- is permitted only after the fifth policy year. |
| Age of entry | Minimum age of 18 years and maximum age of 65 years
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Conclusion
Pension schemes are a topmost priority for retirement. The calculation for a plan is totally based on the day-to-day expenses, age of retirement, life expectancy and the inflation that is to rise. During the retirement and withdrawal phase calculation of the requisite retirement corpus is a must. Once the requisite amount is decided upon, reverse and calculate the sum needed to periodically save until retirement
Looking through the lives of some Hollywood celebrities who earned during their entire career but had no retirement thoughts left out in dire poverty.
Manage the future with a wise investment plan; handle your income wisely, be independent and prosperous. Make retirement a secure and comfortable heaven. Plan it now; Retirement planning is an endless process of reassuring the goal set in advance uninterrupted but carefully motivated.
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