Have you started planning for retirement?

What is retirement planning all about?
Today the uncertainties of life are such that it is essential to start planning for retirement as soon as one starts their first job. While most youngsters earning above-average salaries might scoff at this thought, it is imperative that the earlier one starts thinking about retirement, the better.
We all have expectations of an early retirement with a lovely house, excellent car, enough money in the bank, all our needs taken care of. But to make this a reality, one has to start saving early and take advantage of the power of compounding. Today, there are a number of financial products available in the market and one can choose a suitable product based on their specific needs.

What are the reasons to consider retirement planning?
Here are a number of reasons why retirement planning should be taken seriously.

Increased longetivity and its associated costs: Thanks to advancements in medical science, the average lifespan has been rising. The downside of this is that your retirement corpus will have to last longer.

Medical emergencies: Along with age comes a host of medical conditions which will be an additional burden on your retirement kitty. Thus, your retirement planning will have to factor in medical emergencies.

Inflation: Knowing how inflation works, the amount that you save might fall short for your needs. This is something that needs to be considered when saving for your future.

No social security: Our country does not offer social security benefits during retirement. Thus, one has to make plans for the post-retirement period.

Maintaining your lifestyle: Post retirement, one experiences a fall in his income. Thus, one needs to have an alternate source of income to make up for this shortfall. In order to maintain one’s desired standard of living post retirement, it is essential he start planning early.

What are the advantages of retirement planning?

• By starting early on your retirement planning, you will gain from the power of compounding.
• Some of the retirements planning products such as equity linked savings schemes offer tax-benefits under section 80 C.

Which are the different types of financial products for retirement planning?

• Conventional pension plans: In these types of plans, the insurance company takes all the investment decisions on your behalf while the return is payable on maturity.
• Unit-linked insurance plans: In these plans, you monitor the investment from time to time. The rise in the net asset value of the unit, signify your returns.

Having looked at the importance of retirement planning, it is advisable to talk to your financial advisor and draw a suitable retirement plan.