Financial stability after retirement is a common financial goal. Well-planned retirement investments are crucial for financial freedom post retirement.
This article talks about various retirement investment options that can help reach your post-retirement goals. But, first, let us understand why planning for your retirement is necessary.
Why should you plan your retirement?
Your retirement is likely to last longer than you expect. With advances in medicine, life expectancy for both men and women is bound to increase. Moreover, the cost of living will also increase with time due to inflation. With retirement, your primary source of income stops and you have to rely on your savings and investments. With proper retirement investments, you can easily avoid financial crunches.
Ideal investment plans for retirement
If you are looking for an ideal investment plan for your retirement, you can consider the below options: -
Pension Plans act as a regular source of income during retirement by providing periodic payouts. You can withdraw a portion of the amount when you retire. The rest you receive as a pension to cover your expenses in the absence of your regular income. ICICI Pru Guaranteed Pension Plan is one such plan that provides a stable and lifelong pension, securing your and your spouse's financial independence.
National Pension Scheme (NPS)
NPS is a government-sponsored pension scheme. Through this scheme, you can regularly set aside a sum of money in a pension account during your working life. Your contribution is invested in the capital market instrument of your choice, allowing your investment to grow over the years. Once you retire, you can withdraw a part of the accumulated funds as a lump sum and receive the remaining amount in small instalments throughout your life.
Unit Linked Insurance Plans (ULIP)
Designed for the long term, ULIPs can be viable retirement investment options. ULIPs provide high returns which also help in beating the rate of inflation. You can also choose the funds you want to invest in as per your risk-taking ability. Thus, ULIPs let you build enough wealth to see you through your retirement years. Moreover, ULIPs also provide a life cover~ so that your loved ones are secured. ICICI Pru Signature is a ULIP which allows you to switch between various funds of your choice, without any deductions or additional costs. This increases your gains from the policy. Other advantages include:
- Return of certain charges like mortality charges and fund management charges1 at the end of the policy term, enhancing profits
- Additions to your fund units through wealth boosters2
- Systemic withdrawal plan3 to meet interim needs for funds
- Option for whole life cover~ to protect dependents' financial well-being after retirement
Health complications increase with age, leading to increasing medical expenses. Moreover, costs associated with healthcare, like most others, are also likely to increase with time. Critical illnesses are also on the rise due to changing lifestyle choices. So, it becomes necessary to invest in a health insurance policy as well. This can help during health-related emergencies and keep your retirement funds intact.
ICICI Pru Heart/Cancer Plan covers several critical ailments, heart diseases and cancer. An upfront lump sum payout4 is made on the detection of an illness which is covered under the plan, regardless of actual expenses. The benefits include:
- Freedom to undergo treatment from any healthcare provider of your choice
- Income supplement to sustain your family's livelihood in case of a career break due to ill health
Public Provident Fund (PPF)
PPF is another savings scheme by the Government of India. The government fixes the interest rate for PPFs. It has the double benefit of having tax-free* returns and providing tax* benefits on contributions towards PPF under Section 80C of the Income Tax Act, 1961. The tax benefits add to the returns from PPFs, making them an attractive option to invest in.
Investment in Mutual Funds/Equity
It provides a higher rate of return and can ensure financial stability in retirement. However, navigating the fluctuating market can be a hassle for new investors.
Retirement planning is the most critical step towards financial security. It involves planning your investments carefully such that their returns can replace your regular income. Selecting the right retirement investments is crucial to fulfil your family's needs and lead a debt-free life.
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1 Amount equal to the total of mortality charges and policy administration charges deducted in the policy will be added back to the fund value at maturity, provided all due premiums have been received. This amount will be allocated among the funds in the same proportion as the value of total units held in each fund at the time of allocation. This shall exclude any extra mortality charges and taxes levied on the charges deducted as per prevailing tax laws. Return of Mortality Charges and Policy Administration Charges are not applicable for the Whole Life option.
2 For Signature:
Starting from the end of the 10th year, Wealth Booster will be allocated as extra units to your fund value once every 5 years. Wealth Booster will be a percentage of the average of the Fund Values on the last business day of the last eight policy quarters. The Wealth Booster percentage would be 1.50% for Single Pay and 3.25% for Regular Pay and Limited Pay policies.
3 Systematic Withdrawal Plan is allowed only after the first five policy years.
4 A lump sum is paid out on diagnosis of any of the listed conditions. This payout is based on the level of the condition. In any case, the total payout in the policy cannot exceed 100% of the Sum Assured of the cover selected. Please refer to the sales brochure to know about the payouts at a different level of condition.
* Tax benefits are subject to conditions under Sections 80C,10(10D), 115BAC and other provisions of the Income Tax Act,1961. Goods and Service Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for more details
~ Life Cover is the benefit payable on death of the life assured during the policy term.
ICICI Pru Signature UIN: 105L177V04
ICICI Pru Guaranteed Pension Plan UIN: 105N181V02
ICICI Pru Heart/Cancer Protect UIN: 105N154V03
– the official handbook!