5 Steps to Launch Your Own Retirement Plan

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5 Steps to Launch Your Own Retirement Plan
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• A critical aspect of a retirement plan is how and
  where to invest. The assets you choose to invest
  will vary depending on several factors, which
  include your risk tolerance and investment time
  horizon. These two factors function hand-in-hand.
  The more years you have left until retirement,
  you can opt for higher amount of risk.
• If you are venturing into the retirement game
  late, i.e. after 45 years, majority of regular
  savings should be invested in government
  securities and exposure to equity should be
  limited. If you start reasonably early (in your
  30s) or you expect to have your substantial
  company pension waiting for you, then you can
  take up higher investment risks that will grant
  you the opportunity to earn higher returns. Along
  with right asset allocation it is also important
  to diversify your portfolio. As rightly said, Do
  not put all of your eggs in one basket.

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• The closer you get to retirement, the less
  tolerance you'll have for risk and the more
  concerned you'll be of keeping your principal
  safe. Once you reach your target retirement age,
  you must shift your corpus toward
  income-generating securities.
• Pension and Annuity
• A combination of pension and annuity plans
  offered by life insurance companies is a good
  investment avenue for a secure retirement.
  Pension plans help build a retirement corpus.
  These plans also have assured benefit on death of
  the insured. The unique feature that
  distinguishes it from any other insurance plan is
  that on maturity, two third of the corpus is
  mandated by current regulation to be reinvested
  for generating a regular income stream, which is
  referred to as Annuity. The remaining one third
  can be taken as tax free lump sum. An Annuity is
  an insurance product that pays out income and is
  a popular choice for investors who want to
  receive a steady income stream post retirement.

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• Once you invest in an Annuity, it generates
  payments to you on regular intervals. The income
  you receive from an Annuity can vary from
  monthly, quarterly, annually or even in a lump
  sum payment. You can opt to receive payments for
  the rest of your life, or for a set number of
  years. You can also receive your invested corpus
  back or increase your Annuity every year. You can
  continue to receive the regular payments
  Retirement Insurance Company (by your spouse)
  after you. Annuity offers a wide range of
  options, which can be opted by an individual as
  per his/her requirement.

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• To sum up, below are the key steps to kick
  start your own pension fund
• Establish how much you would need for yourself
  and your partner after retirement. Dont forget
  to consider inflation and expenses.
• Estimate the time horizon you have for
  retirement. Keep in mind the longer investment
  horizon gives better corpus.
• Learn about your employers pension plan so that
  you can plan for the gap in corpus.
• Select the investment avenues that suits best
  your risk and return appetite. As much as
  possible, research and read on the best plans
  available in the market.
• Review the plan regularly, at least every year,
  until your retirement age.
• There are many online tools and guides that can
  help in devising your retirement plan. However,
  its always advisable to take guidance of a
  financial planner for expert view on your plan.
  After all, its not when you retire, but to what
  lifestyle and income you retire.

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