Retirement should not mean compromising one's usual lifestyle. Rather, it is the time a person should reap the benefits of his life's hard work. Financial planning during the younger years is critical, especially since starting early is the key to building a strong retirement corpus. Here are some of the features that a good pension plan should have.
Building a corpus: One should build a corpus with no strings attached such as the compulsion to purchase an immediate annuity plan. It should be flexible, allowing you to withdraw the corpus at any time. Also look at the tax efficiency in terms of payouts received from the plan. Endowment plans with features such as guaranteed cash back can help you to build a corpus with limited premium payment and allow you to enjoy the payouts in the same plan.
Provision for regular future income: While building a corpus, one should be able to get an estimate of what might be the annual payout post retirement and in the following years. A lumpsum at retirement and the flow of a regular "guaranteed" future income can provide that security.
Additional windfall for luxuries: Post retirement, one has the time to indulge in a few luxuries. Hence, it is good to invest in a plan that would provide for them. Such bonuses are offered by endowment plans which declare an accrued reversionary bonus, payable at the end of the premium payment term, which can be timed with the retirement age.
Life cover: Adequate life cover is essential at any phase. More often than not people ignore this requirement or fail to find a plan that offers protection in the older age when it is most necessary for their dependants.
While there are various instruments available to help you plan your retirement, some specially designed endowment plans are an efficient solution to retire rich. One such plan is offered by Bajaj Allianz wherein a lumpsum is paid at the end of the premium payment term that can be timed with the retirement age. Thereafter, the plan offers a steady flow of guaranteed cashbacks and bonuses for a chosen period.
The author is head of market management, Bajaj Allianz Life Insurance
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