Retirement Plan

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Retirement Plan

retirement plan

Saving for  retirement is important because it is the determining factor of your satisfaction with your retirement lifestyle.Saving for  Retirement is crucial because it identifies your sources of income and expenses and establishes your retirement budget, based on your personal needs.

Chances are, you don’t plan to work until the day you die. You may have even envisioned your dream retirement, sipping cocktails on a beach, on a porch in a cozy mountain retreat, or off traveling the world. But it actually takes careful investments for these dreams to be realized.

Fortunately, you can increase your financial readiness by saving and investing towards this goal and be prepared for your golden years.

Investment for retirement

Saving money early on to fund a comfortable retirement life is perhaps the biggest need for any individual now a days. The best retirement fund cannot be the same for all individuals as each one of us has a different risk appetite and return expectations.  Thus, finding the right balance between risk and expected return is key to a successful retirement investment.

Best retirement investments are those which can deliver superior returns over and above inflation during accumulation phase. These returns should be higher than the withdrawal rate at the time for withdrawal of pension benefit. Longer the horizon of accumulation in the right asset class, bigger would be the retirement corpus.

Secrets of a smart retirement investments

      Here are some tips for a smart retirement investor:

  1. Start as soon as you can. In fact one should start saving for retirement with your first income.
  2. Diversification is the key to mitigate the risk and to optimise the returns. Do not put all your investments into one bucket. Proper asset allocation should be maintained.
  3. Depending on your risk appetite put some money in equities so you can benefit from the power of compounding.
  4. Invest your bonuses instead of spending them.
  5. Step up your investment amount every year with the hikes you receive.

Many youngsters might think retirement planning can be done at later stage of their life. However, if you want to retire in style with handsome retirement corpus you will need to plan in advance as your income sources could diminish with age and time to retirement gets reduced.

Investment in Retirement benefit mutual funds:

Retirement income funds are a specialized type of mutual fund. They automatically allocate your money across a diversified portfolio of stocks and bonds. The investments are managed by professional fund managers with the goal of producing healthy returns for the investors. These funds generally have options for different asset allocation in order to manage the risk appetite and return expectation for an investor. Some funds have an objective of producing higher returns. while other funds have a lower risk associated with a goal of preserving principal.

Types of retirement benefits:

Immediate Annuities

 With an immediate annuity you start getting the retirement benefits (income) In exchange for a lump-sum payment. The immediate benefit can be availed through SWP from a mutual fund or the insurance company. There are fixed immediate annuities (Income benefit) as well as variable immediate annuities. Some offer income that will increase with inflation, although that means you’ll start out receiving a lower monthly amount. You can also select the term of the income for yourself and your spouse. Immediate annuities can be a good solution for those who need immediate source of income out of the retirement corpus already built.

Deferred Annuities:

This kind of retirement investment can be done by those who are still earning and wish to save a part of their income towards retirement corpus. These investors can start withdrawing their retirement benefits at the time of retirement.

This type of investment can be done through mutual funds and /or Life insurance. Longer is the accumulation period with higher contributions bigger is the retirement corpus. With higher retirement corpus higher income benefit can be availed at the time of retirement.

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