Retirement Plan – Never Give Up Your Financial Independence

Retirement plans also given the acronym of pension plans are accumulated savings. Stretching over a longer tenure that is designed to feed expenses for life post-retirement, these funds duly fit the label.

Payments are segmented into assigned retirement insurance plans that ensure a steady flow of income without having a job at hand.

These plans offer financial independence to the highest extent. Given the inflation and other financial crisis in play, saving resources only comes in aid when a regular salary source dwindles.

One should not be dependent on investments that often are exhausted for meeting unforeseen expenses. Wherein the retirement plan comes in handy.

A retirement insurance plan envisages the accumulated savings until the age of retirement is passed over as pensions at regular intervals of time or as annuities. A financially sound future is capable enough of dealing with eventualities that might pop up post retiring.

Essentiality of Retirement Plan

This is an aspect of funding that needs a thorough understanding. Gauging the current expenses and chalking out the plausible future expenses enables in reaching a consensus.

Where likely scrambling for funds is far worse than taking the time out now when one actually can to prevent retirement woes by funding annuities.

There are multiple reasons why retirement insurance plans have been successful. There are several agendas that it serves. Some of them are discussed below:

Increasing Life Expectancy

Planning ways of funding life post-retirement are now more evident than ever. Since an average individual’s life expectancy figures have gone up. People tend to live for around two decades over and above their retirement age. This has become a necessity to salvage the savings to maintain future expenses.

Fuelling Medical Expenses

A bigger concern is medical expenses. That becomes all the more persistent with old age. Medical expenses are difficult to fund owing to the rising costs and hence planning is mandatory.

Financial Independence

Life post retirement might seem worrisome without savings that are. Savings have a big role play in aiding in giving financial independence to live life on one’s own terms.

Classification of Retirement Plans

The retirement insurance plans are classified into several categories given below:

Investment Types

The nature of investment classifies retirement plans under two broadheads. Namely investment plans & savings plan. While the former calls for paying regular premiums for funding both debt instruments and equity.

One can choose the ways of funding based on the risk appetite in terms of finances. While the second involves receipts of regularized pay-outs maintaining a certain frequency.

Pay-out Time

Pay-out times are scheduled under two brackets. One that is immediate which entails paying a premium just once and opting for annuity for life. The second deals with fixing the pay-out dates at any given time in the future.

Annuity Planning

There are four main broadheads. Single life & joint life with and without premium return.

Conclusion

A lot of factors are taken into consideration before finalizing a retirement plan. This begins with the corresponding age from when the retirement plan starts as early or late in life. This is based on the financial disposition of an individual.

The premium payment terms, annuity options, monthly expenses, inflation, etc. Assets and loans are also accounted for. Since loan repayments often tend to cash in on big-time on chunks of annuities. Additional benefits to policy surrender charges all come under.