Most retired people will tell you that one of the best things about being retired is the non-existence of work stress. Another good thing is the availability of time to follow their passion and do what they were unable to do while they were working.

While the work stress ends, so does the constant flow of income. So, how can you follow your dreams and aspirations during your retirement period?

By choosing and investing in retirement plans that allow you to sit back and enjoy life as you wish and envisioned.

Retirement plans are investment and savings instruments that help you accumulate funds for your retirement. These plans offer a systematic and simplified approach to being financially prepared for your non-working years.

Retirement plans can help you achieve your retirement goals, such as travelling the world, spending time with family and friends and living a peaceful life. They allow you to keep pace with inflation and cater to multiple financial needs like healthcare, travel and day-to-day essentials.

There are several types of retirement plans in India. Find out about them and choose the best option for your needs.

Insurance-Based Retirement Plans

Insurance-based retirement plans offer dual benefit of life cover` and savings. These types of retirement plans offer an assured sum to your loved ones in case of an unfortunate event during the policy term. Additionally, they allow you to save for your future needs.

Types of Insurance-Based Retirement Plans

• Deferred Annuity Plan

  A deferred annuity plan offers you a regular source of income in retirement. When you purchase the plan, you get to choose a future date. When the date arrives, the insurance company starts your regular income based on your chosen frequency, such as monthly or yearly. Deferred annuity plans also offer a life cover` to your loved ones in the unfortunate event of your absence.

• Immediate Annuity Plans

  An immediate annuity plan is similar to a deferred plan. However, unlike the latter, it offers a regular income immediately after buying the plan. This means you can purchase the plan by paying a lump sum and start receiving regular payments immediately after. Immediate annuity plans also offer a life cover^` to your loved ones in the unfortunate event of your absence during the policy term.

Employment-Based Pension Plans

Employment-based pension plans are offered by companies to their employees. These plans differ for different companies and employees, depending on the salary, position, type of company and other factors. Employer-based plans do not have a life cover^` component and only offer income during retirement.

Benefits of retirement plans

Below are some benefits of retirement plans:

• Savings

  Retirement plans help you save funds during your working years and use them in retirement. They offer you a reliable source of income during your non-working years to ensure you are financially stable to fulfil your goals. It can also help in case of medical emergencies.

• Tax benefits

  Apart from a regular source of income, retirement plans also offer tax^* benefits. Insurance plans like immediate and deferred annuity plans offer a deduction on the premiums paid toward the plan of up to ₹ 1.5 lakh in a financial year subject to conditions prescribed under Section 80C^* of The Income Tax Act, 1961.

• Peace of mind

  Retirement plans offer you peace of mind by lowering your financial stress. Knowing you have adequate retirement savings helps you live life peacefully without worrying about your future financial security.

• Systematic approach

  Retirement plans allow you to save consistently and systematically. The contributions and withdrawals can be customised to your needs. This simplifies the process of saving for retirement.

Conclusion

The benefits of retirement plans extend beyond financial stability. They bring peace of mind, tax^* benefits and a systematic approach to saving. However, it is important to select a suitable plan according to your needs. You can do so by understanding the features of types of retirement plans and choosing a plan best aligned with your requirements.

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