Retirement is a golden period of life. A person puts a lot of efforts throughout his life to ensure that he/she lives a peaceful and luxurious life in his/her post-retirement years, where he doesn’t have to run to make money, where he can follow his hobbies and build a house of his dreams to spend quality time with his family.
To achieve this dream, there are special investment plans designed and offered by investment companies called retirement plans. These plans basically allow you to build a corpus throughout your working years and pay you a steady monthly income regularly when your income stops. Now, these retirement plans mainly have two stages. The first stage is the accumulation stage, where you contribute a fixed amount towards the plan at regular intervals.
This accumulated amount that are the premiums get invested by the investment regulator in securities that are approved by IRDA – Insurance Regulatory and Development Authority. This is followed by the second stage that is the vesting stage. In this stage, all the premium amount that you have paid over the years get paid back to you in the form of regular monthly income in your post-retirement life.
The ideal vesting age is usually 40 to 70 years. During this period, you get a pension, and so it is called the annuity phase. In this phase, you can draw up to 33% of the accumulated amount. The frequency of receiving the income can be monthly, quarterly, half-yearly and annually.
As you decide to invest in a retirement plan, there are a few important questions that you must ask yourself to make sure you choose the right plan that will also save you from regretting later.
Here is a list of questions that you must ask yourself.
- What are your retirement goals?
There are various retirement plans that are offered by various investment companies, and while the benefits and risks they carry vary, it is important to know what you aim to achieve from them. It is vital to assess your retirement goals, as otherwise, it will be difficult to know whether a particular retirement plan is sufficient to meet your post-retirement life needs or not.
- How do you plan to fund your retirement years?
Creating a sufficient fund is important when it comes to retirement planning. You can not merely depend on your savings to support the post-retirement needs especially considering the rapidly growing inflation rate. Most of the organisations provide pensions and annuities to support retirement funding. You must make a decision based on how much funds you would require considering the inflation rates as well as current expenditure.
- Do you have critical health issues?
The current situation of the pandemic has taught us that medical emergencies can knock on your doors at any unexpected time, and you must always be prepared to face them. Keeping in mind old age and the risks of being more prone to illness, it is best advised to take into consideration any illness that you are prone to based on your family history, individual habits, etc.
Considering all these points will help you assess your needs better and choose the best suitable retirement plan.