How I planned my Retirement

Of the retirement solutions available, LIC’s pension plans give you flexibility. Depending on your needs, you can select either immediate or deferred annuity.

Retirement planning is pretty much the elephant in the room. Though a lot of us rely on retirement funds at a later stage, very few actually do anything about it. Especially when we are young. We feel the need to save for retirement comes in at a later stage, and adding more money can solve it. Though that is technically not wrong, starting early gives you more time and less effort to build that corpus. If you want to retire comfortably, some of the following principles will help you do exactly the same.

Increase investment

It might seem pretty straightforward, but a lot of us miss out on this opportunity. As the salary increases so do the expenses, but not the investments. Make it a point to increase your investment quota as and when your salary increases.

Don’t partially withdraw Retirement fund

It is a common habit to withdraw the provident funds on a job change. This might seriously hurt your retirement plans. Instead, you can transfer your funds to the new organization and continue with the same.

Right allocation

Most of the industry experts suggest individuals have 100 – their age as their equity exposure. As you age, lower exposure to varying markets is extremely important, as you would have less time to recover from any dips.

Some of the products on which you can rely for your retirement are :

• National Pension Scheme
• Employee’s Provident Fund
• Monthly Income Schemes
• Fixed Deposits
• Equity-based funds
• Bonds
• Exchange Traded Funds
• Pension Plans
• Annuity Plans

Though each of these products has different ways of operating and varying returns, you can use any of them for retirement. Understanding how much you will need during your retirement is crucial for your planning. Out of the above products, one that makes a convincing case for it is annuity-based plans.

You can choose annuity plans to serve as regular income post your retirement. It acts as a contract between you and your insurance company to pay you the corpus at regular intervals. You have the flexibility to choose the payment interval as either monthly, quarterly, half-yearly or yearly.

Should you consider investing for your retirement using annuity plans, you have the option of choosing between an immediate annuity and a deferred annuity. You can opt for a deferred annuity if you are still working and have some time before you hang your boots. In this category, your investments aren’t paid out as soon as you start the policy. Whereas in immediate annuity plans, you stand to receive your steady flow of income as soon as you start the policies.

LIC Jeevan Akshay VII

LIC’s Jeevan Akshay is an example of an immediate annuity. This policy works on a single lump sum premium and LIC pays you an annuity based on the option selected by you. There are about 7 options that you can select from, as an annuity.

• Lifetime annuity
• Guaranteed Annuity for a fixed duration
• Single premium return on death along with annuity
• Incremental annuity
• 50% of annuity for spouse on death
• 100% of annuity for spouse on death
• Return of premium amount on death

LIC Jeevan Shanti

LIC Jeevan Shanti is one of the best plans to defer the annuity. You may be doing well now and may not be interested in taking the annuity now. In that case, postpone your receivables for one to 12 years. There is a provision to give annuity to the joint holder also.

LIC Jeevan Shanti‘s returns vary as you delay the deferment period. With a minimum entry age of 30 years, this plan is too good for those who want guaranteed monthly returns for a lifetime. 

LIC Jeevan Nidhi (this plan is not available now)

If you are still working and need a retirement solution, LIC’s Jeevan Nidhi might just make sense for you. It is a deferred annuity plan and is not unit-linked. Your corpus amount consists of a good old sum assured, along with a terminal and revisionary bonus and some guaranteed additions. You can additionally add accident and disability benefits as riders for Jeevan Nidhi.

You can avail of tax benefits using either of the policies under Section 80C. However, the annuity received post-retirement is taxable. As Jeevan Akshay is a one-time premium, surrender charges don’t come into the picture. But for Jeevan Nidhi, if the premiums are not paid within the grace period, the policy and its benefits lapse.

There are a variety of products available that you can choose your retirement plans from. There is no ideal age or idea amount to start with. But the earlier you start saving or investing for retirement, the easier it becomes for you. This is how I planned my Retirement with LIC India plans.

Plan for your pension, call 9886568000