All you Need to Know to Retire in Comfort

Posted on by

Nearly 77% of our population overlooks the need for retirement savings, as per recent research and data. With the increasing cost of living indices and increasing life expectancies, the chances of outliving your savings are quite high!

While your retirement may be several years away, it is best to start setting aside a fair amount of cash for you to lead a comfortable retirement life. Therefore, it is best you start planning for your retirement when you are young. That is because it takes time to build a robust retirement corpus.

 

Now that you are aware of the importance of retirement planning, here are 5 investment options you can invest in, for a comfortable life post-retirement.

  • National Pension Scheme (NPS) 

This scheme is operated by the Government of India. You are eligible to invest in this scheme if you are between 18 to 65 years of age. There are two types of accounts: Tier I and Tier II. In the former, there are some restrictions on withdrawal. You cannot take out more than 20% of the contribution if you are below 60. If however, you are above 60 years of age, you can withdraw roughly 60% of the contribution. The Tier II account, meanwhile, has no such restrictions.

If you opt for Tier I account, you need to contribute 10% of basic salary and dearness allowance. Your employer needs to make the same contribution as well. For Tier II account, the minimum contribution is Rs.250 every month. You also need to maintain a balance of Rs. 2,000 at the end of each financial year. This scheme can help you save tax too. As much as 40% of the retirement corpus is not taxed at maturity. 

  • Employee’s Provident Fund (EPF)

This is a popular retirement-saving instrument. There are two key reasons for it: it helps your money grow and provides tax benefits. The money you receive once the scheme matures is tax-free. Be mindful of applying for an EPF transfer in case of a job change. If you forget to do so, you will miss out on the benefits of compounding. 

  • Equities

Equity-related instruments like stocks and mutual funds have the potential to fetch high returns. What’s more, they are tax-free after a year of investment. Ensure that you are investing for the long run. That’s because stocks are prone to high volatility in the short-term. 

This is the reason why a lot of people stay away from financial markets. While they can offer you high returns, there is also a possibility of losing your investment. Hence, it is best that you do thorough research before investing in them. 

  • Bonds

Bonds are considered a safe investment. Bonds are basically loans that you give to the Government or a company, who then pay you interest in return. Bonds can offer high interest rates. You must, however, ensure the bond has good ratings before you decide to invest in them. 

  • Fixed deposits (FDs)

For investors seeking guaranteed returns on their investment, without any effect of market fluctuations, fixed deposits are one of the most preferred investment avenues. You can get high returns by choosing financiers offering competitive interest rates. Bajaj Finance offers one of the highest FD interest rates at 8.35%, which goes up to 8.70% for senior citizens.