With every passing year, the life expectancy of people all over the world continues to rise. In India, there are already a high number of senior citizens. It is common for many people today to live up to the age of 90 years! However, with this increased longevity, there is also a need to create proper infrastructure and retirement schemes
for the aging population.
Since it is possible that you may live up to an old ripe age, it is important to know how to choose a retirement plan and start investing in the same. To this end, many people choose to buy pension plans in India. These are flexible retirement options which can help you create a large corpus for your retirement by offering good returns on investments.
Choosing the right pension plan for yourself
Now, let’s discuss how you can choose the best pension option for yourself. Consider the following questions:
What is the age at which you want to retire?
You need not wait till the age of 60 to retire. Pension plans are flexible retirement options which give you the flexibility to retire much earlier as per your wish, even at age of 45.
Do you need a pension plan?
Chances are that you might not need a pension plan at all. If you’re a Government employee, you will receive monthly pension post the age of 60. But, if you’re a private sector employee, you will receive your dues, gratuity and leave encashment when you quit your job, but no pension thereafter. In such a case, you should look for best pension options in the market and invest in one.
How much money do you want when you retire?
The pension plan chosen by you must be able to provide you with enough money to lead a comfortable life after your retirement. Take stock of your finances and calculate your projected monthly expenses after your retirement. Factor in the inflation as well. This figure should be the expected monthly pay-out of your pension scheme.
Which kind of plan do you prefer?
There are two types of pension plans available in India - Immediate Annuity and Deferred Annuity. Under
Immediate Annuity plan, you pay a lump sum amount and the policy immediately begins providing pay-outs from next month. Under Deferred Annuity plan, the amount is accumulated over a number of years till the policyholder retires. The pay-outs begin thereafter. Weigh in your requirements and choose the best pension option for yourself.
Which are the other schemes where you can invest simultaneously?
Apart from the pension plans, you can also invest in other flexible retirement options to diversify your retirement planning portfolio. You can invest in a PPF account for a minimum period of 15 years and earn interest at the rate of 7 to 8 percent per annum (which is revised every year). Else, you can also invest in bank Fixed Deposits or Government schemes such as Kisan Vikas Patra.