Even though work-life can be stressful, it comes with financial security. You know you have a well-paying job that is helping you manage your expenses and provide for your family.
But what happens when you retire? Your income stops, but your expenses don’t. Not to mention, post-retirement age comes with huge medical bills. That said, if you have not financially planned your retirement life, you can end up in financial crunches.
Investing in the best retirement plans is how you prepare yourself for retirement.
Retirement plans or pension plans can be a combination of savings and investment. With market returns and annual interest, they can help you build a corpus that can aid your finances of post-retirement life.
Here are some of the best retirement plans that you can invest in.
1. Atal Pension Yojana
Atal Pension Yojana is a retirement plus pension scheme formulated by the government of India. It is a contribution-based scheme, designed for people belonging from low-income groups. Under this scheme, the government of India contributes INR 1000 or 50% of the deposit, whichever is lower. The minimum contribution tenure for an individual is 20 years – applicable for the policyholder. The contribution can be made on a monthly, semi-annual or annual basis. The funds can be withdrawn after the policyholder turns 60, or when they retire. Atal Pension Yojana allows 100% withdrawal.
2. National Pension Scheme
National Pension Scheme, also known as NPS, is introduced by the Central Government and Pension Fund Regulatory and Development Authority (PFRDA) and is one of the best retirement plans in India. The pension plan aims to provide social security to senior citizens and retired individuals. All salaried employees, working in private, government or unorganized sectors can participate in this scheme.
The National Pension Scheme requires individuals to make regular investments in the scheme to enjoy the retirement plan benefits on maturity. A portion of this invested sum is used to buy equity, hence the National Pension Scheme, also yields no fixed returns. Apart from that, you can generate corpus through interest. National Pension Scheme earns an interest of 9-12%.
3. Public Provident Fund
Public Provident Fund, also known as PPF, is one of the best retirement plans in India. It was launched in 1968 by the government of India to aid salaried individuals to generate a corpus through systematic and regular investment. Public Provident Fund works by setting up a PPF account. A PPF account invites a minimum investment of Rs 500 and a maximum investment of INR 1,50,000. The tenure of PPF is 15 years, post which the account holder can withdraw the fund value. Partial withdrawals are also available; however, they can be made only after a period of 6 years.
A PPF account earns an interest of 7.1 %, making it one of the best retirement plans that are safe and offers risk-free returns. A PPF account can be set up in a bank or post office. Anyone who is a resident of India can set up a PPF account to enjoy the benefits of the pension plan.
4. Indira Gandhi National Old Age Pension Scheme (IGNOAPS)
IGNOAPS is also commonly referred to as National Social Assistance Program (NSAP). The retirement scheme was instituted in 2007 by the Ministry of Rural Development of India. It is one of the best retirement plans that was formulated with the objecting of increasing financial independence amongst retired individuals. The pension plan works by providing a pension every month to the subscribed. As the plan was designed for individuals falling in lower-income groups, the retirement plan can be subscribed by people belonging to the BPL section who are above 60 years.
5. Max Life Guaranteed Income Plan
Max Life Guaranteed Income Plan is one of the best retirement plans by Max Life Insurance. As the name of the product suggests, the plan provides guaranteed returns in form of regular income after retirement. Survival benefit, terminal benefit and death benefit are the three important features of the plan.
Survival Benefit = Income Benefit + Terminal Benefit
Income benefit comprises the regular income the subscriber gets after the completion of the policy term.
Terminal Benefit is a one-time lump-sum payout the subscriber gets at the end of the policy term. The Policyholder can also avail the survival benefit in a lump sum at the end of the Policy Term, before the payout period.
The Max Life Guaranteed Income Plan also acts as a life insurance instrument as it has the death benefit feature. The lump-sum amount, which is equal to Guaranteed Sum Assured on Death (GSAD) is paid to the family or nominee in the policy upon the untimely demise of the policyholder.
Investing in these best retirement plans in India is a smart step towards financial preparedness for the future. Whichever pension plan you choose, ensure that you read RBI’s guidelines for pensioners before investing in a retirement scheme.
