Retirement Planning: How insurance can contribute towards building a robust retirement fund

The retirement phase of our life is a milestone where we bid adieu to a traditional work routine and set out to begin a new chapter. It’s a wonderful phase where we seek to fulfil many of our dreams and aspirations that may have been on hold during the working years. Be it travelling, volunteering, learning a new skill, pursuing a long cherished hobby or spending time with friends and family, retirement provides an opportunity to create a fulfilling existence beyond a regimented work life.

Culturally, retirement planning was never on top of the list for us, Indians, but studies have shown that over the years the focus has shifted and now it ranks 6th, among the top financial priorities of today’s working population – 35 to 50 years.

A few of the reasons why retirement planning has become so important today:

An enriching retired life

Retirement isn’t considered a dull phase of life with nothing interesting to look forward to. People take on life’s second innings with renewed zest and consider it as an opportunity to pursue their passion and accomplish many unfulfilled dreams.

Taking charge of medical bills

Health expenses are undeniable and this is one area that has to be primarily focused upon, especially during the retirement phase. Along with that, the inflation factor cannot be ignored as well.

An income source to last a lifetime

With a comprehensive financial retirement plan, it is easy to tide over apprehensions of exhausting the corpus that may have been built during the work years.

Becoming self-reliant financially

With the retirement fund in place, the vulnerability factor will erode with no financial dependency, be it on the children, family members or friends.

Increased life expectancy

A study conducted by a prominent media channel has shown that there has been a 100% increase in life expectancy in India since 1947. This, along with collapsing traditional family structures, has made it imperative for people to plan their retirement well in advance.

Early retirement option

Many people might not have the zeal to work till 60. The FIRE – Financial Independence, Retire Early phenomenon, is gaining popularity amongst the millennial and Gen Z population. If retirement planning is done at an early age, it creates the perfect opportunity to start one’s own venture. A survey done last year has shown that 67% of Indians are contemplating early retirement, with some considering it as young as 33 years of age.

Tiding over untoward circumstances of life

An emergency situation can come up unwarranted. A retirement fund will ensure the situation can be resolved with promptness and assurance.

Retirement planning is an undeniable facet of life and in order to make it financially viable, life insurance policies have a very important role to play. The common presumption is that life insurance offers a protective financial shield to the immediate family members, in case of an untimely demise of the policyholder. While that’s certainly true, life insurance policies can also be great financial tools to build an outstanding retirement corpus. These low-risk fund options are excellent for lowering tax and therefore suitable for goal-based savings, such as retirement.

Here’s how life insurance can help build a retirement fund:

Regular income in retirement:

These plans can be suitable for people irrespective of the income groups, as they convert the savings in the form of premiums into regular lifelong income. Moreover, most retirement plans offer bonuses as well as loyalty additions to boost the retirement fund corpus.

Low on risk:

Retirement phase is different from the working years. The risk appetite drops and people tend to seek safer bets, which stands true even in their financial goals. With a savings pool that’s cautiously built, it’s paramount to utilise the fund wisely to cover the expenses, without losing money for market volatility.

Disciplined approach:

It’s always best to start investing early and the same stands true for retirement planning as well. Along with an early start, it’s best to be disciplined when it comes to paying premiums. This will ensure the golden years have a steady flow of money setting aside the stress that comes with fluctuating market rates.

Saving on tax:

Life insurance plans provide various tax benefits under Section 10 (10D) and Section 80C of the Income Tax Act, 1961. These benefits can help make the most of the retirement savings and at the same time lower the tax output considerably.

It is always prudent to be financially independent and build a safety net to bust any financial exigencies, if they may happen anytime.

So, plan today to make your tomorrow safe and secure with a comprehensive retirement plan.