Retirement-the term itself has a golden aura of contentment around it. When we say
the word 'retirement', we often think of a person peacefully sitting in a rocking
chair and reading a book, or sitting at the beach sipping coconut water. Retirement
is a golden phase of one's life-it signals the end of obligations and duties and
the start of a second innings but for most retirees, this supposedly golden phase
of their life can quickly turn into a nightmare.
The lack of adequate retirement planning leads to low financial reserve. Added to
this, the stoppage of income can wreak havoc in the life of a retired person. From
being somebody who financed the expenses of the entire house for years, one suddenly
becomes dependent on children and close relatives for daily living.
Avoid the pitfalls of unplanned retirement
Taking a pension plan when one is still young and employed should be on the horizon
of every working person today. But for a person in his 20s and 30s, retirement is
a distant possibility that will take years to become a reality. Hence, one fails
to plan for it adequately while one still makes a good income.
In fact, the very concept of 'retirement' needs to be re-examined. Who says that
a person may retire only at age 60? He may choose to retire even at age 40 if he
so wishes! But to retire at any age, a person must first adequately prepare himself
with clever financial planning using a pension plan.
Pension plans = Like annuity plans?
Pension plans are insurance-cum-investment options for those looking for a healthy,
financially independent retirement. The policy holder must pay premiums towards
them every year, and the policy matures at the time of retirement. Then on, the
person receives a regular periodic pay-out of the accumulated corpus, or may receive
it in a lump sum payment.
A pension plan thus frees a retiree from the perils of low finances and also provides
life coverage. In this context, they are very similar to annuity plans. A person
investing in an annuity plan may choose to get a one-time pay-out soon after the
premium is paid(Immediate Annuity)or pay premiums for a number of years and receive
the pay-out once the policy holder retires. It is advisable to take a pension plan
when one is past the age of 30 and making a good living. It is possible to make
regular premium payments at this stage, and a person past his 30s is in a better
position to judge the age at which he will retire.