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Improper retirement planning makes it difficult for many people to live their retired life as they've always imagined. Here are the reasons why should retirement planning be on top of your priority list.
As you reach your late 20s and early 30s, you get so occupied in fulfilling the personal and professional responsibilities that you tend to lose sight of the future. As a result, retirement seems a distant thought and not something you should be concerned about, at least for a couple of decades.
Unfortunately, this approach towards retirement planning makes it impossible for many people to live their retirement years as they’ve always imagined.
1. Money Needs Time to Grow
If you know anything about the world of investment, you might know that it takes time for your investment to grow considerably. You provide your investment with adequate time to grow as per your risk appetite when you start early. More importantly, the younger you are, the more affordable the investment journey is with most retirement products such as annuity plans.
2. Build a Larger Retirement Corpus
When you start investing towards retirement, which is probably 20-30 years away, you cannot avoid considering inflation. The life expectancy is rising, and the medical costs have been increasing consistently as well. All these factors call for a larger retirement corpus that could take care of your basic expenses and medical costs, preferably for you as well as your spouse.
By starting early, you get more time to be aggressive with your investment approach. You can consider asset classes like equity that come with a higher level of risk but exceptional returns potential. Once you reach your 40s-50s, debt instruments are a better choice as they are safer, but the returns potential is mostly limited.
3. Be Financially Independent
You’d like to live a financially independent life as long as you live. Moreover, you’d also want your family to enjoy a similar life. But without adequate retirement planning, you might have to depend on your children or even sell off your assets to keep up with the post-retirement expenses.
With products such as annuity plans, you can regularly invest a fixed amount during your working years for building a retirement corpus. The plan provider will then start paying regular pensions to you once you retire. While private employees have options like PPF and EPF, they often fail to beat inflation and require additional investments such as annuity plans.
4. Death Benefit and Other Riders
Apart from retirement, death is another aspect that people don’t generally like to think about, especially when they are young. But it is an unfortunate and inevitable truth of life that one should plan for in advance. Most retirement plans come with a built-in death benefit that provides the nominee with a lumpsum pay-out in case of the policyholder’s demise.
This pay-out could help your family live a financially stable life in case of your unfortunate demise. Some insurers also offer other riders such as accidental death benefits and permanent disability benefits for enhanced financial security to you and your family.
As can be seen, several reasons make it essential for you to start planning your retirement right from when you are in your 20s and 30s. Moreover, different types of saving and investment products could add direction and stability to your retirement plan. Get in touch with a reputed insurer to know more about the available products and choose ones that best meet your retirement objectives.
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