Retirement plans are crucial for living a stress-free life after retirement. Such plans help in building a financial corpus that the person can use in his/her post-retirement life.
In this article, we will discuss a few benefits of retirement plans and why every person should get one.
One of the concerns that every individual has is financially securing their life after retirement. Thus, they search for various plans that can help them build a corpus. Retirement plans can enable people who are looking to accumulate funds for life after retirement.
Retirement planning is essential for living a hassle-free life after retirement. While planning, an individual must consider various factors, such as his/her income sources, short-term and long-term expenses, assets, and savings. It is recommended that a person should start planning for retirement from an early stage once he/she enters his/her profession.
Benefits of Retirement Plans
- Retirement Plans Can Provide Good Returns
It is wise for people to start planning for retirement when they start earning. This can help them to stay invested in a retirement plan for a longer time. Therefore, it can lead to good returns.
- Retirement Plans Can Help in Meeting Expenses
With the help of a retirement plan, a person can build a significant financial corpus. Therefore, this corpus can help them meet regular expenses. It can also help them pay for big-ticket expenses. Thus, such a plan can enable a person to live a stress-free life after retirement.
- Retirement Plans Can Help Plan for Unexpected Expenses
Unforeseen expenses, such as a medical emergency, can consume the entire savings in a short time. Hence, it is essential to get protection against such expenses. As a retirement plan can help a person accumulate a corpus, he/she can use these funds to pay for any unforeseen expenses.
- Retirement Plans Can Safeguard Assets
If a person has no money post-retirement, then he/she might have to sell his/her property in order to get funds. However, a retirement plan can help a person build funds for life after retirement. Thus, he/she can safeguard his/her assets.
When to Start Retirement Planning?
It is important to start retirement planning from an early age. Not paying attention to retirement planning early can lead to a lower accumulation of funds. This can cause a lot of financial problems post-retirement. It is recommended to stay invested for a longer time to build a substantial corpus. Therefore, starting from an early age can help people with this objective.
Let’s take a look at an example-
Mr. Ajay plans to build a corpus of Rs. 2 crores for his life after retirement. His age is 25 years, and he wants to retire when he becomes 60 years of age. If he invests in a plan that can provide him with 12% returns per year, then he can achieve this goal in 35 years by investing Rs. 3,500 every month. However, if he delays the investment by 5 years, then in 30 years the corpus he can accumulate is Rs. 1.2 crore. Therefore, by delaying by 5 years, he will not be able to meet his goal.