Retirement plans are also known as pension plans in India. These are investment plans which involve investing a portion of one’s savings to gather wealth over a long period. The primary purpose of such plans is to provide people with financial cover post-retirement.
Retirement planning allows an individual to live with financial independence without worrying about or compromising on the standard of living even if they have stopped working. Retirement planning is imperative these days as the cost of living and inflation continue to rise over the years.
In India, pension and retirement plans are used interchangeably. Retirement planning is often associated with an investment in good retirement schemes that are offered by trustworthy scheme providers. Some of the retirement or pension plans available in India are:
- National Pension Scheme
- Pension Funds
- With cover and without cover pension plans
- Deferred Annuity
- Annuity Certain
- Guaranteed Period Annuity
- Life Annuity
- Immediate Annuity
- Whole Life ULIPs (Unit Linked Insurance Plan)
While nearing retirement or post-retirement, one may run out of savings because of spending on emergencies, for instance, Thus, investing in retirement or pension plans helps to ensure a good lifestyle post-retirement. Investing in the right pension plans can provide substantial financial backing due to the compounding effect over the years.
Therefore, it is advisable to invest in the best retirement plans that align with your income and expense pattern. Also, begin investing early so that you have good savings by the time you near your retirement and can plan on your further savings accordingly.