Pension plan is a investment plans which let you allocate some savings over a specified period to build a corpus that provides you with steady income after retirement.
Pension Plan - Securing your finances for retirement
Retirement is a crucial stage in everyone’s lives which brings together apprehension about your financial capacity. To maintain the same lifestyle after retirement is practically impossible as you have to survive on your savings and meager pension. Most people have to alter their lifestyle after retirement drastically. Pension plans ensure you receive a continuous flow of income, after retirement. After working for a majority period of your life, retirement is a phase to sit back and relax with your savings. A Pension plan helps you remain financially independent and remain stress-free.
What is a Pension Plan?
Pension Plans are long-term investment plans used for your retirement planning. It allows you to receive tax benefits and accrue savings over a certain period. The savings will then enable you to receive a steady source of income. The payments you receive are dependent on the length of your investment.
Why do I need a Pension Plan?
Even if you are a person who has the habit of savings, at times, there is a chance that you may drain your savings for emergency expenses like hospitalization or to satisfy immediate lifestyle needs. To prevent such things, it is essential to go for a pension plan to not suffer from financial problems in your twilight years. Pension plans give you that advantage as you cannot withdraw the funds until a specific time. Premature withdrawals are available only in case of genuine and proven emergencies.
Numerous studies indicate that the current generation is not actively planning for their retirement life. Compounding the misery is that the vast majority of the present working populace are not eligible for a pension after retirement. It is essential to save during your golden years to have a peaceful retirement life in such a situation. Pension plans help you create a corpus from which you can receive a regular income flow after your retirement.
Types of Pension Plans
Just like other insurance policies, Money back policyholders are eligible to apply for add-on packs. The add-on options include hospitalization, illness, and many more. The rider options available differ from each policy,
How to choose the best pension plan?
Different people have different expectations. With a wide variety of options available, it is better to choose the one that fits your requirement. Here are a few variables that you should consider before investing in a pension plan:
Choose a plan that offers returns that would be sufficient to lead your life conveniently. Pick a plan that provides high returns.
Get to know the tax implication of the plan that you want to invest in, well before buying.
While most pension plans come with a lock-in period within which you cannot withdraw the invested money, some plans carry flexibility when it comes to withdrawal.
Sooner the better
You must plan for the dry days even during the rainy days. Retirement planning must begin early on. The sooner you start, the bigger will be your savings.