Have you done Retirement Planning?

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Retirement Planning

Have you done Retirement Planning? 

In day to day life, everyone wants to save for the purpose future so that at the time retirement, he may enjoy life with peace and calm without compromising standard of living.

Can you imagine if a famous idioms Much ado about Nothing”, becomes true means if you worked tirelessly throughout to ensure that you’ll live life on your terms after retirement, but  due to lack of proper planning it is vanishes.

Following are some investment options available in the market which help you to set aside a huge portion during your working years for your long-term needs. Further, these plans also offer tax benefits under Section 80C of the Income Tax Act.

  1. Unit-Linked Insurance Plans Pension Plans:
  • The Unit-Linked Insurance Plan (ULIP) ensures that systematic savings can be accumulated over a period of time to provide steady income post retirement.
  • In this plan either you can pay lump-sum amount or some regular payment as per your choice, also invested in funds of your choice. You can then opt to receive pension after vesting age (age at which you become eligible to get pension).
  • Further, these are flexible products and let you decide the equity exposure as per your age, risk appetite and the number of years left for retirement.
  • Following are some choices:
  1. If you are in the early accumulation stage and have a number of years left for retirement, you can take more risk and invest in equities.
  2. However, if you are approaching the retirement age, you can exercise switch fund options and invest more in debt funds.
  3. After retirement, you can choose from the available annuity options to get regular income.
  • Besides tax benefits on premiums paid, you also get one-third of the accumulated value on retirement as tax-free under Section 10(10A).
  1. Senior Citizen’s Saving Scheme (SCSS):
  • It is open for people above the age of 60 years or who have taken voluntary retirement and belong to the age group of 55 to 60 years.
  • Minimum amount of Rs 1000 for investment. One can open more than one SCSS account by opting for a joint account with the spouse but the limit of total investment cannot exceed the maximum investment limit, which is Rs 15 Lakh.
  • While investments in SCSS are eligible for tax deductions under Section 80C, the interest earned is fully taxable.
  • Also, the income is subjected to tax deductions if it exceeds Rs 10,000 in a financial year (However wef 1stApril 2018, if the payee is senior citizen the said limit is Rs 50,000)
  1. New Pension Scheme (NPS):
  • It is best for those who want a low-cost retirement product along with limited liquidity.
  • It can be started with as low as Rs 500 per month and provides the facility of life-cycle fund as well as diversification of the fund.
  • Tax benefit on investment is up to Rs 50,000 in a year under section 80CCD (1B), which is over the tax benefit of Rs 1.5 lakhs under Section 80C.
  • Anyone can start the NPS account; however, it is mandatory for government employees and optional for private employees.

 

  1. Equity Linked Savings Scheme (ELSS):
  • An ELSS is a useful option for salaried people looking at tax incentives and high returns.
  • However, being an equity fund linked, they mirror the financial markets, and therefore, there is no guarantee of returns. You can start investing in ELSS with as low as Rs 500 for tenure of 3 years.

 

  1. Public Provident Fund (PPF):
  • If we classify according to safety PPF is highest one, PPF is a long-term investment that suits to investors of all profiles.
  • The PPF account can be opened by both salaried and self-employed people, with a minimum deposit of Rs 500.
  • Further, PPF offers dual tax benefits. The entire maturity, including the interest earned, is tax-free.

Conclusion: From today let’s plan our investments so that we can enjoy the benefits later. The more early you start planning for retirement, the more fund for future you can accumulate. Hope this article will guide you to smartly plan your retirement.

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