Retirement is a time to relax and enjoy life without the stress of daily work, but it also brings the challenge of managing finances. Without proper planning, monthly expenses can become a burden. This is where effective retirement plans and disciplined investing play a crucial role. By choosing the right options and making the right decisions, you can build a steady income stream that supports your lifestyle well into your golden years.
Here’s how to get started with ensuring your income keeps coming even during your post-retirement life:
Annuities are one of the most reliable ways to ensure post-retirement income. You invest a lump sum during your working years, and after retirement, the insurer pays you a fixed monthly income. Some annuity-based retirement plans even allow you to choose between lifetime income, joint life income, or income for a fixed duration. This option ensures that you have a predictable cash flow regardless of market fluctuations.
While planning for the future, it is important not to overlook the present. Make sure to use the right tools, such as a salary calculator and retirement calculator, to get clarity on how much you earn right now and how much you can dedicate towards retirement.
For those comfortable with market-linked investments, systematic withdrawal plans (SWPs) allow you to withdraw a fixed sum from mutual funds at regular intervals.
These function like a customised savings plan, where you can enjoy both growth and income. While returns are not guaranteed, equity or hybrid funds can provide higher inflation-adjusted income in the long run.
Government-backed schemes can be some of the safest retirement plans as they offer guaranteed income and capital protection. Here are a few popular options:
Public Provident Fund (PPF): A long-term savings plan with a 15-year lock-in, offering guaranteed returns and tax benefits under Section 80C. The tax-free maturity makes it a secure way to build a retirement corpus.
National Pension System (NPS): A market-linked pension scheme designed for long-term retirement planning. It allows flexible contributions across equity and debt funds and provides additional tax benefits beyond the standard 80C limit.
Senior Citizens Savings Scheme (SCSS): A five-year deposit scheme for individuals above 60, offering solid interest rates, with quarterly payouts. It ensures both safety and a steady income.
Post Office Monthly Income Scheme (POMIS): Provides fixed monthly interest to depositors; an ideal savings plan for retirees who prefer an assured cash flow with minimal risk.
Relying on a single source of income may be risky. Instead, retirees should build a diversified portfolio by bringing together fixed deposits, debt instruments, equity investments, and insurance-based products. A well-structured savings plan ensures that while some assets provide steady returns, others offer growth potential.
Insurance companies offer retirement plans where you pay premiums during your earning years. At retirement, you receive guaranteed pension payments. These plans come with added benefits like life cover or the option to include your spouse. Such a strategy not only protects your family but also provides a continuous source of income.
Healthcare can become a major expense in retirement. Including medical coverage in your financial plan can ensure that your income is not drained by unexpected bills. Certain savings plans also offer riders for critical illness or hospitalisation benefits. By securing health-related needs in advance, retirees can ensure that their primary income is used for day-to-day living expenses.
Real estate can be a source of steady monthly income. Investing in a rental property during your working years provides regular cash flow once you retire. This complements your other retirement plans and acts as a hedge against inflation. However, it is important to account for property maintenance and market risks before considering it as a primary income source.
A retirement strategy should always account for inflation. What seems like enough income today may not be sufficient a decade later. Regularly review your portfolio and adjust your savings plan to ensure that your retirement income maintains its purchasing power over time.
Also, even after you have retired, it is essential to monitor your portfolio. Shifting between equities, debt, and annuities based on your needs and market conditions can help you ensure stability. Using tools like a salary calculator can help you evaluate expenses against income sources and keep your retirement finances on track. With the right approach at the right time, your retirement years can truly be stress-free and fulfilling.
Disclaimer: This article is published in association with IndiaFirstLife and not created by TNM Editorial.