Retirement Planning!! - An insight

Retirement. Like most people, your response to this will be `I still have time for it´! All you foresee is that this will be your opportunity to spend quality time with family and grand kids, play golf on weekdays, long walks by the sea, and so on. But as retirement approaches, one comes across the stark reality of sustaining their lifestyle without a steady stream of income - with steep medical costs, taxes, inflation and the rising cost of living. When it comes to planning for retirement, most of us start thinking of it just a few years ahead of the `R-Day´. The truth is, you need to start today! Ideally one needs to start saving from the day one starts earning. This helps your savings grow and multiply through the power of compounding. One key component of retirement planning is arriving at the savings one should have to cater to all of these future expenses. You can arrive at an estimate through the following steps.

Step 1: Think of lifestyle you would like to maintain post retirement. Step 2: Prepare a monthly budget that lists down what you spend on necessities today so that this would help you in calculating your future annual expenditure. Step 3: Account for inflation keeping a rough estimate of 7-8 per cent inflation every year. Step 4: Provision for expenses that are likely to increase to increase in the future, such as medical expenses. Step 5: Provision for expenses that may cease to exist, such as repayment on a home loan, your children's education expenses, etc. While there are many ways that one can save; pension plans from life insurance companies are amongst the best suited investment vehicles for this purpose.

How Do Pension Plans Work Pension plans from life insurance companies are structured in a way that they: Help create a corpus in the long term through your regular premium payments Offer tax benefits on savings Create a tax free lump sum to withdraw from Provision for a monthly annuity that acts as a regular income stream These also help meet the dual purpose of safeguarding the interest of your financial dependents and create a retirement corpus. Conclusion : Retirement can and will be an enjoyable time, in the sunset of your life, only if you plan for it today. It´s never too late to start planning, evaluating investment options, making disciplined investments and make the best use of your working years.  Courtesy: MNYL