IN ULIPS, THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER

The first step to retirement planning is determining the amount of money you would need to maintain your lifestyle and fulfil your post-retirement aspirations.

This amount is also greatly influenced by the length of your retirement life. Here are a few easy steps to get started towards retirement planning:

Step 1:

## Calculate the Expenses

Your current expenses provides a benchmark for your future requirements. You can do this by using a simple formula, ‘Expenses = Income – Savings’. For example, if your annual income is `10 lakh and you manage to save `3 lakh every year, your current expenses are `7 lakhs a year.

Now work backwards and list down the expenses that add up to `7 lakhs. Filter out the expenses that will not be there when you retire. This means, all the household expenses like groceries, utilities, house help, and other expenses like healthcare, annual vacation, insurance premiums, etc., can stay (assuming that your child has completed the studies), EMIs towards loans (that will be cleared before retirement) can be dropped.

Let us assume that this amount that is needed comes up to `3.5 lahks.

Step 2:

## Account for Inflation

The money required for day-to-day expenses today and that required post retirement will not be the same. This is because of inflation. It is the biggest factor you need to consider for calculating your retirement amount.

Hence, if you are 35 years old and spend `3.5 lakhs a year today, after 25 years (retiring at 60), you would need close to `12 lakhs (@5% inflation) a year to maintain your lifestyle.

Step 3:

## Consider The Life Expectancy

No one can estimate how long they would live. However, with the innovations in healthcare and medicine, the average Indian life expectancy will only increase.

*In fact, the Union Ministry of Health and Family Welfare has released data to show that life expectancy in India has gone up by five years, from 62.3 years for males and 63.9 years for females in 2001-2005 to 67.3 years and 69.6 years respectively in 2011-2015.

For people living in urban India, having easy access to technology, internet and latest medicines and healthcare services, the average life expectancy can easily reach 80 years. Hence, the `12 lakhs that you will need at retirement will increase to `32 lakhs a year (@5% inflation) by the time you are 80.

In order to stay ahead of inflation, you need to get smart with your savings, investments and taxes. You need an investment vehicle that will help your money to potentially grow faster than the rate of inflation.

#### Disclaimer

Unlike traditional products, Unit Linked insurance products are subject to market risk, which affect the Net Asset Values & the customer shall be responsible for his/her decision. The names of the Company, Product names or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns.
W/II/0411/2016-17

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