Plan your retirement to secure your golden years

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Retirement Fund
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Plan your retirement to secure your golden years
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• India has one of the highest populations of
  youngsters, and with each passing year, more and
  younger Indians are joining the workforce. At the
  same time, India is expected to have a population
  of over 200 million who will be above 60 years in
  2035.
• This section of the population will need to be
  able to financially support itself as the cost of
  living and lifestyles change. As individuals are
  expected to live for 15-20 years post retirement,
  it becomes essential for an individual to
  financially secure his golden years.
• Added to this is the rising medical cost, which
  is running way ahead of the normal inflation, and
  the breakdown of the joint family support system.
  Most working individuals in their early thirties
  may not even think of a life after retirement.
• By the time they get into their forties, the
  thought of retirement settles in and then begins
  the planning - one of the key challenges here is
  to make up for the time that is lost due to lack
  of planning early.
• For example, if an individual spends Rs 25,000 a
  month today, at an inflation of 7 per cent, the
  expenses after 25 years would increase to Rs
  1,36,000. Add to this medical expenses, which
  increase with age and other expenses - the
  monthly expenses could actually exceed Rs
  1,50,000.

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• HOW MUCH DO I NEED?
• A systematic approach makes it easier to estimate
  the amount required after retirement and
  accordingly select an appropriate financial
  savings instrument.
• Calculate Based on the current expenses,
  calculate the amount which will be required to
  financially support oneself and the family, after
  retirement. Companies offering pension products
  have retirement fund calculators on their
  websites which can help one to calculate the
  quantum of money required post retirement for
  financial independence.
• Save Regularly start saving a predetermined
  amount of money that will help you build the
  desired corpus for life after retirement. It is
  advisable to put aside a portion of your income
  as savings before expenses, rather than saving
  what is left after expenses.
• PUBLIC PROVIDENT FUND Public Provident Fund is a
  100 per cent debt-oriented investment, guaranteed
  by the government of India. A minimum
  contribution of Rs 500 a year is mandatory. This
  product has a lock-in of 15 years. Partial
  withdrawals are permitted from the sixth year
  subject to certain conditions.

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• While EPF and PPF have been providing returns
  ranging between 8.5 and 9 per cent (the current
  returns for 2014/15 are 8.75 per cent and 8.70
  per cent for EPF and PPF, respectively), the
  other pension products have provided higher
  returns primarily due of the exposure to
  equities.
• The below table depicts the performance of equity
  markets, the probability of positive returns and
  the expected returns from a regular annual
  investment of Rs 20,000 in equities.
• EPF and PPF are tax free on maturity. For NPS the
  entire proceeds are taxable. Maturity amount of
  unit-linked plans are tax exempt provided the sum
  assured is 10 times the annual premium.
• An individual needs to ensure that their
  retirement planning portfolio comprises of a mix
  of products mentioned above. The key is to start
  early, make regular contributions and remain
  invested till retirement age.
• Source http//businesstoday.intoday.in/story/inv
  esting-tips-for-retirement-planning-icici-prudenti
  al-exec/1/217806.html

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