Here’s how you can go about selecting the best Retirement Plan
Retirement, whether at the age of 45 or 60, is the most awaited phase of your life because it means freedom from your everyday mundane and monotonous 9-5 jobs. The crucial questions that loom over your retirement goal could be:
How do you want to see yourself when you retire?
Do you see yourself 11 years down the line, at the age of 36, owning a business that you always wanted?
Or do you imagine yourself travelling extensively to the places you always wanted to explore?
Your investment plan for retirement should offer acceptable answers to these questions for you. Following are the crucial factors you must consider while selecting your retirement plan, to ensure the retired life you are looking for:
1st Does the plan offer tax benefits?
For a financial goal as large, unpredictable and as crucial as retirement, you need to eliminate as many costs as possible on the investment. Tax is one such cost. Thus, it becomes the most basic condition all your investment towards retirement should follow.
Most retirement investment plans offer tax exemption on the investment amount and maturity value. But you must check the nature of deductions before committing your money to a plan.
Unless you have already used your limit of tax saving under section 80C, there’s no point investing in a plan which does not offer immediate tax benefit.
2nd When You are a Fan of DIY?
If you are a fan of ‘do it yourself’ when it comes to investing, you’ll love the challenge of saving for the retirement. The challenges in retirement goal are as follows:
- Imagine and estimate the cost of living post-retirement
- Use online financial calculators or excel spreadsheet to estimate the retirement corpus you will need
- Use retirement calculators to estimate the amount you need to invest regularly to achieve the goal
The three steps above are sufficient to create an investment plan towards your ideal retirement. However, there are few things you would like to consider:
- Consider 110% or more of your estimated living cost post retirement
- Be conservative in the interest you will earn on your investment