The mere mention of the term “retirement” provides a sigh of relaxation to people who work long shifts every day. On weekday mornings, retirement could mean sitting at home with a newspaper in hand, while for others, it could mean taking an afternoon nap. While others may define retirement as taking a road trip with friends and family, soaking up the sun, and enjoying the peace. Yes, those golden years are eagerly anticipated by hardworking professionals like you, who labor for 8-10 hours a day.

In a nutshell, retirement is the end of a salaried person’s daily struggle. As we age, our source of income is likely reduced, pension plan is usually considered to be a blessing for retired people as it leads them to live a financially independent life during this wonderful stage of life. As a result, everybody who aspires to financial freedom and a happy retirement will recognize the need for retirement planning. An effective retirement plan would enable people in private jobs to define their retirement income goals and then construct a feasible path to enjoy the advantages.

What exactly is retirement planning? 

Setting retirement income objectives and taking the steps necessary to accomplish those goals is the process of retirement planning. Identifying sources of income, estimating expenses, putting in place a savings plan, and managing assets and risk are all part of retirement planning. To determine whether the retirement income objective will be met, future cash flows are projected.

When is the right time to begin?

If you’re in your late twenties or early thirties and reading this, you’re a millennial. In India, life expectancy was around 74 years when you were born. If you’re reading this, you’re most likely educated, wealthy, and living in a city in India. This indicates that your life expectancy has recently increased to roughly 88 years. Let’s have a look at your financial situation now. As a millennial, you most likely value the finer things in life, such as travel, dining out, entertainment, and finding a nice playgroup for your child. You’re probably also inspired by the founders of companies like Zomato, PayTM, Pulse, and Flipkart, and wish to start your own business one day. Add to this the reality that your monthly savings are at best a lakh, after paying substantial amounts for urban rent, home and auto EMIs, children’s schooling, and other expenses. Let’s pretend for a moment that you’ve managed to accumulate a total of Rs. 20 lakhs for your family’s future. With a modest 6% annual inflation rate, this amount of money will be worth only 11 lakhs in ten years. It gets worse after 20 years, with a worth of only 6 lakhs. That isn’t even enough to buy a new car, let alone support you after your monthly income stops! If you are a millennial who is unsure about the percentage of income that can be committed to savings/investment versus disposable income, you should start planning for your retirement today. Early retirement planning will help you stabilize your life.

What are the investing instruments/products that you can use for your retirement planning?

ULIPs: ULIPs are similar to entry points into the world of equities. ULIPs are a unique product that combines mutual fund investment and life insurance into one package. You may experience a metaphorical heart attack as a result of market volatility, but be assured that your ULIP plan will cover your metaphorical funeral as well! ULIPs has a 5-year lock-in term, which helps us develop the habit of saving, therefore it’s a win-win situation.

Such beliefs and thoughts are prevalent among today’s millennials. ULIPs have recently been modified to make them more accessible, and they are the ideal blend of market investing and affordable life insurance, making them a favored investment product for working millennials. The advantages of ULIPs are worth the effort and money invested, whether you consider the tax savings or the ability to choose from a variety of funds.

Public Provident Fund (PPF): PPF might be considered one of the greatest long-term investment plans for millennials because it provides both stable interest income and tax benefits. Compounding can be quite beneficial in this scenario because PPF has a 15-year lock-in term. PPF has a tax status of EEE (Exempt-Exempt-Exempt). The maturity amount, as well as the total interest generated during the investment period, are tax-free.

National Pension Scheme (NPS): The National Pension System (NPS), a government-run investment system, allows subscribers to choose their preferred asset allocation among various asset classes. It can also be considered one of the finest investment plans for millennials because it is a mix of FDs, bonds, and equity, according to experts. Tier 1 and Tier 2 accounts are available from NPS. While the Tier 1 NPS account is exclusively a pension account, the Tier 2 account, often known as an investment account, is a PRAN-affiliated optional savings account. Income tax advantages can be obtained by investing in a Tier 1 account.

Health-care coverage: Millennials should also invest in health insurance policies and take advantage of the Section 80D income tax exemption based on the premiums paid. These plans provide peace of mind in the event of a medical emergency by covering the expense of treatment.

Mutual funds: Millennials can also invest in mutual funds through a Systematic Investment Plan (SIP) (SIP). A fixed sum is withdrawn from a designated savings account every month and invested in a mutual fund chosen by the investors, resulting in financial discipline. These funds provide opportunities in both the equities and debt markets, and they cater to a wide range of investors with varying risk appetites.

Life Insurance Products (Guaranteed Products and Long Term Endowment Products): As a retirement planning tool, life insurance is great. Life insurance is a long-term financial tool with relatively low rates. The premiums that are invested, as well as the maturity/vesting benefit from the insurance plan, are tax-deductible. The Life Cover component is also covered by an insurance plan, which provides a great deal of freedom in terms of the types of investments one can make. Unit-linked insurance plans give financially astute persons the option of transferring funds and diverting premiums, giving them a lot of flexibility. There are additional possibilities for novices who do not have time to actively manage their funds, such as continuing to save until they reach a desired lump sum value at maturity. Money-back and annuity plans can also be used to assure a consistent income stream after retirement.

Did you know that people can now pre-retire, half-retire, and re-enter the workforce? Retirement has developed into a much more flexible idea. The majority of people regard retirement as the start of something new, rather than the end of something. Yes! Retirement is not as frightening as it may appear to some. A huge number of people anticipate living their best lives in the retirement phase. With the trend of retirement being more dynamic than the pre-retirement era, it’s best to approach it with a strategy. Because of the changing trends in retirement tastes and lifestyles, retirement planning has become even more important and an easy way to plan the life of your dreams.