In his book ‘Tess of the d’Urbervilles’ classic English novelist and existentialist Thomas Hardy wrote, “The two forces were at work here as anywhere else; the inherent will to enjoy and the circumstantial will against enjoyment.”
A hundred years later, many of us can still relate to the aforesaid. The rigmarole of routine life can get to us at times. How we wish we could retire early and spend our lives doing something that we consider our life’s true calling; be it travelling, kitchen gardening, pursuing the arts, or maybe just living a secluded, peaceful life in a part of the planet we love the most. Well, the good news is, that is totally possible. All it needs is a good pension and retirement plan and an early start.
By regularly investing a small amount of your monthly savings in a pension or retirement plan, you can create a steady source of income for your post-retirement life. In a world where inflation is constantly rising and the cost of living is hitting the roof, saving money is not enough. It is becoming increasingly important that we invest some part of our savings in a pension and retirement plan. This would ensure that our money grows over time, and we can meet our post-retirement expenses without any worries.
It is a common fallacy to think that we don’t need to think about retirement early in our careers. We are too engrossed in contemplating over our day-to-day expenses and taxes. Buying that new car or TV is on top of our minds. In fact, the only time we’d probably think of investing in a pension plan is when we want tax deductions under section 80C. While that may be an immediate benefit, it should not be our priority. Neither should we procrastinate on our decision to invest. Because by starting early, we can benefit from the power of compounding.
Let’s assume that you start investing Rs. 300 per month in a pension plan at age 25. Assuming that the rate of interest is 8%, by the time you are 65 you could well be sitting on Rs. 10 lakhs. Now let’s say you delay this investment decision for a decade and finally start investing when you’re 35. In this case, at age 65 you’ll have Rs. 4,40,000 given the same rate of interest. Thus, by starting a decade earlier you could more than double your return.
Apart from the aforesaid, before finalising a plan we should first make an estimate of our expected financial need post-retirement, inclusive of those dependent on us. Then we should take into account our other sources of income that will help us meet these expenses. With these factors accounted for, we can calculate the amount of regular income we would need from the plan we are investing in and invest accordingly.
One of the better plans in the market that you might want to consider is HDFC Life Pension Guarantee Plan. It offers a wide range of annuity options from which you could choose, depending on your need. There are various other options that make the plan flexible and customisable in accordance with your requirement. For instance, you can take the plan on a single or joint basis, you have the option to receive an immediate annuity or a deferred one, you can further choose to receive the deferred annuity on a monthly, quarterly, half-yearly or a yearly basis, and the plan even offers an option of return of purchase price in the event of death of the assured.
For more info, visit HDFC Life.
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