Our retirement years are our golden years, where we drop our 9-5 routines and spend time to relax and catch up on the hobbies we’ve missed. Years before retiring, people often start planning their future travel plans and other activities. However, they underplay the importance of financial planning post-retirement. However, this is something one must plan carefully since retirement also means an end to a steady and regular source of income.
What is Retirement Planning?
Retirement planning helps you plan the financial support you will need to fulfil your post-retirement plans, maintain your lifestyle and support your family after leaving your professional life and the regular income behind. Planning your retirement includes selecting the best retirement plan for you in India and receiving a regular income from the plan that will take care of your monetary obligations.
Why is Retirement Planning Important?
Your time in the workforce will last for a few decades, and before you know it, you will be celebrating your last day at work one day. While the retirement period may seem calm and relaxing from afar, you will be handling daily living expenses and many other financial liabilities in reality. Apart from this, there could also be health issues since ageing and years of stress can take a toll on everyone’s health.
It is easy to lose track of our long-term financial goals over the years. It takes conscious effort to start planning post-retirement finances. And hence, here are some reasons why you need retirement planning:
- Medical emergencies:
With the rise in the medical costs and health problems that one faces in old age, it can be tough to keep up with the healthcare bills. One of the most important reasons for getting a retirement plan is that these plans will help you take care of your health costs.
Over the years, the globally observed price rise can be credited to inflation. The consequences of inflation can be quite massive, even if they appear minimal in the short-term. For instance, 5% of inflation will mean ₹100, which will be ₹95 in one year. However, a 5% decline can be quite harmful. In 20 years, a sum of ₹21 lakhs will have the same power as ₹7.5 lakhs today if inflation increases by 5% every year.
For a developing country like India, the consumer level inflation can be higher than 5%. While you may not indulge in many activities during your retirement, it is better to get a pension plan that considers inflation.
- Nuclear families:
Staying in a joint family is not so common these days. Nowadays, elderly individuals are staying by themselves and do not rely on their families for monetary support. Many families have started reducing the number of children they have. The children may be busy setting up their own lives or an elderly couple’s children may be bogged down by their own pressures, which may not give them time to take care of their parents.
Therefore, you must begin planning your retirement as soon as possible. With retirement planning, you will not have to rely on anybody for financial support.
- No state-sponsored pension:
A lot of individuals in India have started working in the private sector. While the private sector has many perks, however, a major disadvantage is that they do not offer state-sponsored pension after retirement. This means private-sector employees have to take care of their retirement funds by themselves.
Getting a retirement plan can help you select a plan as per your financial goals and needs.
Having a retirement plan enables you to live with dignity in the absence of a steady salary and to deal with medical emergencies, rising inflation, daily expenses, etc. You can select some of the best insurance retirement plans available online with the help of a basic pension calculator.