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Top 8 Benefits of Retirement Planning
8 Benefits of Retirement Planning
1. Safeguarding Financial Emergency
Without income and savings after retirement, it becomes difficult to lead a life and meet basic requirements. When you are on the verge of retirement without savings, it can be frightening when you think about the future. By building a corpus, you can secure the future of yourself and your dependents and live a life of dignity even when the monthly income stops after your retirement.2. Securing Tax Benefits
Another significant benefit of retirement planning is tax deduction by allocating your money to tax-saving instruments of investments like PPF and ULIP. Investment in those instruments will help you reduce your net taxable income under different Sections of the Income Tax of India. It can give you a significant financial respite and reduce your financial obligations.3. Growing Fund
You can grow your fund by investing in instruments for retirement planning. Instruments like Unit-Linked Savings Funds (ULIP), National Savings Certificates, mutual funds, stocks, Public Provident Funds (PPF), term deposits, etc., can help you grow your fund by earning returns or interest. You need to invest your money judiciously after considering your risk appetite.4. Establishing Financial Independence
You can secure peace of mind by knowing you will have an adequate balance in your financial portfolio. In case of emergencies, you do not need to depend on others or take loans.
In this regard, you should also ensure that you have a pension fund in place. One of the major benefits of a pension plan is that you can build a large amount of retirement corpus without any active management from your end. Rather, your employee will deposit a certain percentage of your income to your pension account every month.
5. Beating Inflation
The prices of products and services rise with time due to inflation. So, you need to ensure that your money grows with the inflation rate.
By investing your surplus amount in instruments like mutual funds, bonds, ULIPs, etc., you can grow your deposit with interest higher than the inflation rate. This way, you can reap maximum benefits from the retirement plan, making your post-superannuation financial management less challenging.
6. Protecting the Future of Family
The primary objective of retirement planning is to save money for the future to ensure financial independence. This habit of saving money regularly and growing your fund can help you save a large amount of corpus you can even pass on to your successors. So, retirement planning protects your financial interest and helps your heirs lead a comfortable life. This way, you can also contribute significantly to your lineage.7. Protecting Assets
If you do not have a retirement corpus at your disposal, you may have to liquidate your investments or other physical assets to meet the emergency requirement fund. Selling the properties you intend to pass on to your heirs may be difficult. You can easily pay all your bills when you have an emergency fund or sufficient savings on your post-retirement investment instruments.8. Creating Opportunities for Early Retirement
People look for early retirement for reasons like starting a venture, getting opportunities to travel, or enjoying better health. However, the only constraint behind realising the dream is financial insecurity. If you have sound retirement planning enabling you to grow funds, you can opt for early retirement without worrying much about your economic challenges.Why Should You Plan for Retirement From an Early Age?
Setting your objectives early in life is better for getting the maximum benefit of retirement planning. Following are the reasons why you should start early:
- Easy to Manage: When you start your savings early on, it will become easier for you to meet your goals. Starting early lets you spread your savings over a long period, and as a result, you can save a large amount of money for your post-retirement expenses by saving a little every month. The burden will be manageable for you.
- Power of Compounding: One of the major benefits of planning retirement from an early stage is leveraging the compounding effect on your savings for an extended period. It lets you grow your money exponentially as the interest gets added to the deposited amount or principal and the interest earned.
- Building Habit of Savings: By planning for retirement from an early age, you get the motivation to save money every month from almost the beginning of your career. This can help you build the habit of limiting your unnecessary expenses to save money for your future.
Retirement planning lets you stay financially independent. You can enter your life of superannuation with confidence and fulfil all your major life goals. Nevertheless, to get the maximum benefits of retirement planning, it is better to prepare early in your career. It will make it far easier to save and grow a substantial amount of money to protect the financial interest of you and your family members.
FAQs About Benefits of Retirement Planning
What are the important factors you need to consider while planning for retirement?
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What are the factors that can affect retirement planning?
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Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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