Prepare yourself for the retirement phase with the best pension plans your money can buy now. Understanding each product will help you decide better. A retirement is an event that most of us knowingly or unknowingly work towards. A lot of us have a goal of reaching to our retirement earlier so that we can enjoy our life. It technically means the end of regular pay checks or regular source of income. In order to be able to enjoy that phase one needs to have planned things properly.
The word plan plays a crucial role over here. You not only need to beat the current inflation rate but also make sure your portfolio is respectable when you reach there. All this while you have to navigate your way through several financial products available. Though some of them are pretty good and worth investing time and money on, you can avoid a lot of them. We will be talking in details about 10 such plans which will help you in the later stage.
- National Pension Scheme
The National Pension Scheme or NPS has been gaining lots of traction over the past few years and quite rightly so. The scheme which is mandatory for government employees has provided about 10% returns in the past four years. What makes this instrument interesting is the ability to expose some of your investments to equity.
- Employee’s Provident Fund
Employee’s Provident Fund or EPF is one of the most trusted instruments when it comes to retirement planning. Investing in EPF would give you returns of about 8.5% at the current rate. EPF also allow you to avail tax benefits, as they fall under Section 80C.
Unlike NPS, you are not forced to purchase an annuity with the EPF. However, if you switch jobs or have plans for the same, continuing with EPF would be beneficial.
- Exchange Traded Funds
ETFs weren’t available only till recently in India. They are securities which trade on specific indices and allow you to invest in them. You can currently invest in either Gold or Index based ETFs. Regular investing gives you the leverage of cost average and will help you build a corpus for your retirement.
If you want to grow your portfolio at a faster rate, there is no escaping from the equity market. Investment options such as stocks and mutual funds have provided the strongest returns in the recent years. It is crucial to find out funds where you can park your money for a longer duration.
Usually, bonds exist for a duration of 10 to 15 years and you can expect returns of 10-12%. These are loans taken by government and companies from you and pay you interest for the same.
- Senior Citizen’s Saving Schemes
SCSS is one of the most preferred retirement schemes available at the current times. The product allows you to gain returns of 8.6% annually and also comes under Section 80C. People close to their retirements or early in their retirements can choose this plan and invest up to Rs. 15 lacs.
- Monthly Income Schemes
Having a monthly income plan during retirement can be quite helpful as you receive income on a monthly basis. You have lots of options to choose from. Be it mutual funds, insurance products or post office schemes. The only difference being, they are not eligible for tax benefits.
- Fixed Deposits
FDs used to be one of the most popular choices for investment and probably still are. However, the returns that they provide have reduced a lot of late due to the falling interest rates. A different interest rate slab for senior citizens means you stand to benefit 0.25 to 0.5% more than the general public.
- Pension Plans
These plans are similar to the monthly income plans, and you can choose between insurance based products, ULIPs or mutual funds. Though the latter has much lower charges, which means you get more value for your money.
- Immediate Annuity
You can opt for immediate annuity plans by insurance companies. However, lower returns of 5-6% annually and a clause which makes your capital used for the purchase of the annuity non-refundable makes it a tough choice. If you are someone who can build his or her own portfolio, you can skip this product.
One can use a blend of these products to plan for their retirements. Each of us has different needs and different financial goals. Thus, a combination of these would help you through your retirement stages.