How to Build a Pension Plan for your Retirement?
Long term planning
In India only 4% of the total population is either having a pension for their Names or had planned a pension plan for them. Rest of the population is totally unaware or not had a thought of the pension. It is as much important as like planning for a term plan. Early death and Late Death both are very dangerous. Now in India, awareness has increased for term plans, But still Pension planning is under planned.
Retirement is the period where your income has stopped but the expenses has not stopped. We need to take care of those rainy days where the income is very less or even zero.It is the time to spend and enjoy the receding days of your life. There are many ways to secure your retirement days such as government bonds, equities, recurring deposits, shares and debentures, gold and silver and the most important pension plans from insurance companies in India. These pension plans provide you the financial security to live with pride without compromising on your living standards. With the high cost of living and rising inflation, pension planning has become more important.
Here we had given Five essential tips that can help you to build a pension plan that will make you feel confident about living the retirement you want.
Think Long Term
Start as early as possible
There is no right age to start for starting towards your pension. The Right age is your age now.To build a good retirement pension plan, it is very important that you should plan well in advance. Early planning helps contributing more funds and help average the fluctuations and risks in the investments.
Increase your contribution whenever possible.
With the increase in the overall inflation, cost of living and increased life expectancy, there is a higher chance that you may end up requiring more pension than planned. So it is always better to keep our target savings overachieved. Target atleast 15% of your CTC as annual savings towards your pension. Increase the contribution whenever possible. You can save additionally during bonus and increments.
Your savings should be diversified into various options like shares, Mutual funds, gold, bonds, etc. Any adverse market situation shouldnt be biting the whole of your pension savings. Always have an investment mix if 2 or 3 products. Allocate the savings between equity and bond investments according to your age factor.
Make your savings grow. Splitting your investment across various sectors and asset types can help overcome the effects of big market fluctuations. Investing on a regular basis helps balancing market risks.
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