Every year people retire from their jobs and enter retirement. As life expectancy increases and medical technology advances, more and more people are reaching retirement age. It is also true that with increasing longevity, people are becoming more mentally active towards the end of their lives. Having the best investment plan for retirement is crucial as time goes very fast, and it is crucial to get your retirement in place with proper planning.
The best steps to follow are:
Employee provident fund
An employee provident fund (EPF) is a type of retirement plan intended to provide employees with financial security. Every employee getting a salary, a small part of your salary will go to the employee provident fund. EPFs are the best instrument to help you gain security related to your finances post-retirement happens. The best part is that if you do not withdraw the money from EPF after changing the job, you will recieve a big amount after retirement.
How does an EPF work?
Both private and public sector organizations manage EPFs, and trustees run them. These trustees are responsible for managing, investing and safeguarding the funds provided by the employers and employees. The earnings of EPFs are taxable as per the income tax laws of India and hence need to be filed accordingly during tax season every year.
Invest in PPF
The Public Provident Fund (PPF) is a long-term investment option with an assured return. It is one of the best investment plans for retirement and has been the most preferred choice among investors since its launch in 1968.
It is always best to invest in the PPF as the returns are tax-free and help in deductions. It can get looked like it is not a big amount, but it will be bigger once the amount becomes huge.
You can invest between Rs 500 and Rs 1 lakh annually for 15 years, with a minimum lock-in period of five years. The interest rate offered on this scheme has been 8% per annum for the past few years. However, there have been some exceptions where interest rates were higher than 8% per annum in certain months, such as June 2016 and December 2017, when they were 9%.
The government announced an interest rate of 8% per annum on PPF deposits made during January 2019. This rate is the same as that of banks on fixed deposits (FD).
Have a pension plan
A pension plan is one of the best investment plans after retirement. Having a good amount of regular income that will keep credited to your account post-retirement is like a new life.
Pension plans are different from other investment plans in many ways. The main difference is that there are no restrictions on the amount of money you can invest or withdraw from your account. The other advantage of such a plan is that it offers better and tax-free returns than any other investment plan. That makes it an ideal choice for people who want to save for retirement or for others who need regular income after retirement.
The following are some benefits of having a pension plan:
Tax-Free Income: The interest earned from your investment will be tax-free at withdrawal time. That means you will not have to pay any taxes on this income. Moreover, if you invest in bonds or shares, then they will also be tax-free at the time of withdrawal when held for more than one year before the maturity date. Do check out the best tax saving investment plans on internet for investment.
Flexibility: Pension plans give you maximum flexibility compared to other investment options because you can withdraw funds whenever required without any restrictions on a time limit or amount withdrawn per year etc.
Buy term insurance
When looking for the best investment plan for retirement, you cannot ignore protecting yourself and your family with term insurance. As the standard of living for the people is rising, it is best to have a term insurance cover of 1 crore to take care of all your needs.
Term insurance is one of the best options to protect your family from unforeseen circumstances like death or disability. In case of the death of an insured person during the policy tenure, the sum assured will be paid to their nominee/legal heir. What makes term insurance one of the most popular options among people looking for life insurance plans? Let’s find out:
1) Low premium: Term insurance policies offer low premiums, which make them an ideal choice for people looking for affordable life cover. The premium rates vary depending on various factors such as age, health condition, etc. Still, most companies offer policies at affordable rates that fit within your budget without compromising on the coverage amount.
2) Flexible coverage period: Unlike other types of policies, term plans allow you to choose between two different coverage periods—10 years or 20 years—depending on how much time you want your policy to last before renewal.
Emergency fund cover
When it comes to health insurance, we all need it. Some people have some or other form of health insurance, but even then, they not have got enough coverage. As far as emergencies are concerned, they are unavoidable and can happen anytime. The worst part is that the costs involved in such situations can be very high. So many people do not have insurance coverage, and when it comes to an emergency, they spend their savings or borrow money from someone else.
An emergency fund cover will help you take care of your finances in any emergency. Some might think having an emergency fund cover is a waste of money, but this could not be further from reality. Getting an emergency fund cover should be one of your priorities if you want to take care of your finances properly.
The best part about having an emergency fund cover is that you do not have to pay anything upfront. That means you can get all the benefits without spending anything initially on it. Once you have signed up for the plan and made payments regularly, there will be no issues with reimbursement claims or anything else related to it.
The process of finding the best investment plan for retirement begins with assessing your personal financial needs, investing philosophy, and timeline. The answer will be different for everyone. Planning your retirement is like building a house. You have to have a plan before you start building. Doing this will save you from extreme stress at the end of your life. There is nothing worse than realizing at the end of your life that you forgot to take care of everything afresh before you left this world.