A pension plan is one of the key ways to secure your retirement life. In terms of what most people work for, it is a comfortable & peaceful retirement life. In order to do that, you need to have two aspects of your finances sorted. The first is to have a huge retirement corpus along with some emergency reserve & the second is to have a pension plan of sorts to have some flow of cash inflow in your retirement age.
Pension plans are designed to help you out in easing your retirement life. These plans help you out in receiving a steady income when retiring. It also helps you out in living the retirement life you want. Explore the world, or live in a cozy place or pursue a hobby or do anything that you like in order to stay happy. A pension plan is always the best decision to have the best retirement life. Here is all you need to know about the retirement needs & the benefits of a pension plan:
- Why plan for retirement & get a pension plan?
- The average life expectancy in India is on the rise with the improvement in medicine & technology. The average Indian man or woman now lives up to the age of 78 with ease. To lead an excellent post-work life, one needs to invest in a pension plan.
- Medical expenses may pile up or increase substantially as you age. In addition to rising expenses, these medical expenses may sometimes show up unannounced.
- Financial independence is what everyone desires. The absolute peace that one attains when they are not financially dependent or indebted to anyone is absolutely calming.
The benefits of a retirement or a pension plan are:
- The power of compounding comes into play: Investing at a very early age gives you the benefit of leveraging the power of compounding. The interest rate that you generate over time gets invested again to provide you with additional returns.
- Rainy day funds: A safety net is what everyone needs to protect their financial needs. In times of emergency, everyone needs to have some sort of rainy day funds that will help them out when they need them. The pension plans also provide you with the financial support you need in case of critical illnesses or permanent disability due to an unfortunate accident.
- Steady income flow: With a steady income flow that comes with a pension plan, you & your spouse can receive a regular pension for life.
- Protecting your child’s future: Some pension plans are designed in a way to provide your children with a lump sum amount in the absence of both the parents & this will help you secure their legacy & the future.
- Tax benefits: With a pension plan, you have the advantage of availing tax benefits upto a limit of Rs. 1.5 Lakh under sections 80CCC and 10(10A) of the Income Tax Act, 1961.
These decisions with regards to investment in the pension plan must be taken after deep research & the above reasons will make it the best plan for you.