How to Plan a Safe and Secured Retirement

Until a few years ago, retirement in India meant children looking after their parents' financial and other essential needs. However, times have changed. With significant lifestyle changes, people are moving towards building a robust retirement plan for themselves so that they don't become an economic burden on anyone. While India's current average is 27 years, which means half the population is younger than that, retirement planning may seem like a tedious task to today's young generation, which can be postponed further. However, the popular phrase, 'the benefits of starting early' rarely fits another construct better than an early retirement plan. 

With the constant rise in the inflation rate (currently 8%) and the average cost of living, it is imperative that retirement planning must assume prominence at the earliest. Early retirement planning ensures that you do not compromise on the overall post-retirement lifestyle and expenses. Not to forget, if your retirement is now planned well you could run the risk of outliving your savings and would later need to depend on family members for basic financial necessities. Given the current economic scenario in the backdrop of the ongoing public health crisis globally, investing your hard-earned money in a suitable annuity product may be the answer to your queries. After all, annuity products are specifically designed to meet long-term retirement needs. 

Annuity plans are plans where you pay a premium once and get a pension for life, and the invested amount can also be given back to your nominee. Broadly, there are two types of annuity plans available in the market- a) Immediate Annuity plans, and b) Deferred Annuity plans. Immediate Annuity products allow you to pay once and start receiving a pension from the very next month. Deferred Annuity products let you pay once and start receiving a pension after the next 5 or 10 years. These plans are usually for customers between the age group of 45-50 years with a lump-sum corpus to invest and have about ten years remaining for retirement. Interestingly, once you pay in an annuity plan, your pension rate is fixed. You can even opt for a variant for your spouse and yourself. Such variants allow policyholders to receive a pension for life and after their death, provides a pension to the spouse. 

In a myriad of investment products, what makes annuity plans stand apart is their fixed pension rates that stay constant for life. While the interest rates of financial instruments like FDs have declined constantly from 8.5% in 2014 to 5.5% in 2021, annuity plans remain unfettered and keep your pension fixed. This factor makes annuity plans superior to all other retirement options. 

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