Most people will advise you to begin retirement planning as soon as you start your first job. That is a perfect scenario. With student loans and other responsibilities, this is not always possible. Approximately 60% of Indian millennials do not have a retirement plan. Many young people find it easier once they are in their 30s or 40s and settled. Here are some of the best options for these age groups to accumulate a substantial amount of wealth to last after retirement.
National Pension Scheme (NPS)
It is an Indian government-sponsored voluntary investment programme open to all types of employees. When you retire, you can withdraw 60% of your corpus, with the remaining 40% going towards an annuity plan. This way, after retirement, you will have a regular income as well as a lump sum to cover larger expenses. This scheme is known to provide higher returns than the Public Provident Fund. It is a retirement plan for people with lower risk tolerance, ideally in their 30s and 40s. A portion of the investment is allocated to equities, and this portion decreases year after year, increasing the safety of your savings over time. NPS also provides a tax deduction of up to Rs.2 lakh.
Mutual funds are another type of pension scheme that can be used for retirement planning, offering a mix of potentially high profits and safe debt investments. Even if you begin investing at the age of 40, a Systematic Investment Plan can provide you with sufficient funds by the time you retire. This plan requires you to invest a set amount of money in your chosen fund every month, which is easy on your wallet. Even if you already have a retirement plan, a mutual fund investment can supplement it.
Another one of the best types of pension schemes is insurance policies. Contrary to popular belief, you can obtain an insurance policy in your forties. A whole life insurance plan with a premium return is a good option for retirement planning. Insurance plans are designed for people who do not want to take any risks with their investments.
Unit-Linked Insurance Plans combine life insurance and investment, which is exactly what you need in your 30s and 40s. This is what makes it one of the best types of pension schemes. They can save you from having to choose separate investment and insurance products, and they can help you stay secure while also making money. They also have numerous tax advantages. They provide a lot of flexibility for switching funds, allowing you to reduce your risk whenever you want.
So, these were a few types of pension schemes that you must invest in before you turn 40. Retirement planning after the age of 30 is not only feasible but also profitable. You'll be ready for your post-retirement life once you've found the right types of pension schemes or a combination of plans.
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