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Why Retirement Planning Is More Important Than You Think

Why Retirement Planning Is More Important Than You Think

Retirement is one of those inevitable phases of life, which marks the end of our careers that we have built over the years by acquiring skills and constant hard work.  Assignments, deadlines, meetings etc. soon get replaced by holidays, pursuing new hobbies, and spending more time with family. While some people look forward to this relaxed and stress-free life post retirement, some get worried about the loss of a steady source of income.

If you do not prepare yourself financially, retirement can be quite depressing for you and your family. Retirement is a time when income drops and expenses rise. So, financial planning is required for leading a financially independent life even after retirement.

Financial planning simply refers to saving up money for the future. A number of people start saving for retirement without knowing how much they will need to maintain their standard of living after retirement.

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So, if you have already started your retirement plan, ask yourself one simple question,“Am I saving enough for my retirement?”

In order to beat inflation, both savings and investments are very important

Inflation is the general increase in the price of goods and services. As years pass by, inflation eats away at the value of your money. In order to beat inflation, you need to not just save but invest as well.

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The following are three basic rules of thumb for a successful retirement plan!

1. Start Early

The earlier you start saving for the future, the more money you will have in retirement.The more you procrastinate on your retirement planning, the more money you will have to contribute in order to achieve your retirement goal.

Another advantage of starting early is that you can take risks in your investments. Equities, for example, are risky but it may offer a very high return on your investment. If you want higher return from equities, you may need to stay invested for as long as possible.

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2. Invest in Various Avenues

There are many different investment avenues that can help you grow your money. Mutual funds offer high rates of return on investment, though it requires constant market monitoring to keep your money safe.  ULIPs or Unit linked Insurance Plans may be good investment products as they offer the dual benefit of investment and insurance. Also look into investing in real estate, which can still provide you a steady check while retired.

 3. Stay Invested

(This has been mentioned but needs to be explained further because of how important it is.)

Have patience and stay invested.

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Equity investors, for example, may lose faith in their investments as the initial return often looks disappointing. But if they stay invested for a longer period of time, equities usually offer a high return.

Unit-linked pension plans can be best for successful retirement planning. These plans allow you to choose from various fund options based on your risk appetite. Based on market fluctuations, you can switch and redirect your funds. You may be able to choose to pay your premiums on a monthly, quarterly, half-yearly or yearly basis. It will allow you to make investments in a systematic manner over a long period of time for higher returns. In case of your untimely death, your loved ones may be able to receive the the benefits.

Another advantage of a pension plan is that it offers income tax benefits both as the premium and the maturity proceeds. This can be your incentive to stay invested for as long as you earn and are liable to pay taxes.

To Wrap Up!

Retirement is an important milestone in life. Retirement planning, therefore, is a process that should not be left for the later stages of your life. The key to a successful retirement plan is to evaluate your retirement needs, set a financial goal, start early, stick to the plan, and, last but not least, go for products that will not only help you achieve your targeted goal but also protect your money from the volatility of the market.

Featured photo credit: Pixabay via pixabay.com

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George Olufemi O

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Last Updated on March 29, 2021

Life Insurance: A Secure Way To Protect Your Future.

Life Insurance: A Secure Way To Protect Your Future.

Life is a journey full of ups and downs. No one can actually predict what might happen the next moment; there are times where the happiest moments do not even take a second to turn into the gravest. Planning for your future can help you face such unwelcomed but irrepressible situations with much ease. We all want to make every memorable event of our life more special and to cherish all those moments happily and worry less, you must financially plan your future. But no one has control over life and death. Who would wish to see his family suffer in his absence? Insurance hands over the financial jeopardy of life’s happenings to an insurance company.

Importance of getting a life insurance

No one has control over life and death. Nobody would like to see their family suffering in an absence, and that’s why many people recommend life insurance. A life insurance plan is one of the best ways to secure the future of your family, even against those financial troubles after an untimely demise. These plans are safe and credible, and you could trust them for your family’s better future.

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On the other hand, a life insurance policy is a contract between a company (insurance provider) and policyholder in which the insurance provider ensures to pay a certain amount of money to the nominated beneficiary in case of the policyholder’s death during the term of the agreement. There are different types of insurance plans, and it is important for you to know the benefits of those plans such as a funeral, medical or some life expenses provided they are mentioned in the agreement.

Choosing the right insurance plan

If you’re about to select an insurance plan, you should consider some important factors:

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  • The time at which you start investing in a program and the number of family members you want to get insured. Obviously, a married man with two children has different needs compared to a single one. The number of persons who are dependent on an individual also varies from person to person.
  • The next thing you need to consider is you and your family needs. What are your child’s dream, your retirement plans, for how long would your dependents need financial support, any personal injury, etc. And do not forget those events or situations that will surely demand a huge sum of money.
  • The next thing one must consider is your current income. You should preferably choose a plan which you can afford.

Now you must be having a pretty clear idea of how to choose the best plan for you. Further, you should also compare various plans offered by different companies and numerous sites available online that help will you to compare them.

Differences between life insurance plans

Here’s a short brief of some plan categories you can choose according to your needs:

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  • Term Insurance Plan – You have to pay once, and your nominee gets the paid money under your misfortune demise. It ensures a person for a fixed time. If you survive the policy period, you do not get your premiums back.
  • Whole Life Policy – This plan continues for your lifetime. Under this, the policyholder has to pay regular premiums, until their death.
  • Endowment Policy –  In case the individual dies during the tenure, the beneficiary gets the amount assured. If the person survives the policy tenure, they gets back the premiums paid with other investment returns along with several other benefits.
  • Money Back Policy – In this a portion of the money invested is returned to the investor at regular intervals. If you survive the insurance term you get the entire amount back; else the beneficiary receives the entire sum assured.
  • ULIPs – These are the life insurance plans that offer you future security plus wealth creation options.

Many people do not opt for whole life policy and endowment policy because of the high amount of money you need to pay, while others may prefer to opt for these if they have a high life expectancy. Surely you will find the best one for you.

So what are you waiting for? Plan for your future and live a happier and carefree life today.

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Featured photo credit: aryehsampson.com via aryehsampson.com

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