- Steady income flow is needed for daily expenses even after retirement
- Subscribe to a pension plan for income at regular intervals
- Lookout for retirement plans with insurance to get dual benefit
By the time you retire, most of life’s responsibilities would have been fulfilled leaving you time to follow your hobbies and be at ease. The only flip side of retirement is not getting a steady, monthly income. Setting a retirement plan in action now, will help resolve the issue.
Here are 6 ways you can ensure regular inflow of income once you have retired.
National Pension Scheme (NPS)
NPS is a low-cost and tax-efficient instrument to build corpus for your retirement. You can choose to contribute monthly, quarterly or annually. When you open an NPS account, you are allotted a unique Permanent Retirement Account Number (PRAN), which can be used across India. So, if you plan to move to another city after retirement, no additional procedure is involved. NPS offers complete transparency and flexibility to choose the pension fund schemes.
Additionally, contributing to NPS gives you tax benefit up to Rs. 1.5 lakh under section 80C. In case of withdrawal due to retirement, you are required to invest at least 40% of the accumulated corpus to buy an annuity plan. This annuity service provider(ASP) will pay you the monthly pension.
Unit-linked Insurance Plans (ULIPs)
ULIP is a life insurance product that gives you an additional benefit of market-linked returns. Like any other life insurance policy, you pay an annual/monthly premium. A portion of it is used to provide life cover and the other is invested in market. Since it is a long-term investment plan, ULIP is an ideal instrument for your retirement. Choose the policy period of until retirement and pay the premium regularly to get the maturity benefit In case of any untoward incident, your family gets the death benefit in your absence. Investing in ULIPs also gives you tax benefit under section 80C. Pay-outs received from ULIP plans are exempt from tax as well.
Many life insurance companies offer specially designed retirement plans that provide double benefit of life insurance and investment. In the accumulation phase, you pay premium regularly, which is exempt from tax. The money accrues during the policy tenure, which is eventually invested in market. At the vesting age, the age when you want the pension to start, you get regular pay-outs. You can withdraw 33% of the corpus in lumpsum and the balance is paid as pension throughout your life. You also get life insurance cover throughout the policy term.
In an annuity plan, you have to pay a lumpsum amount to a life insurance company, who then pays you regular income throughout your life. Thus, you do not have to keep paying the insurer at regular intervals for a long period of time to be able to avail income benefit after retirement. The insurance companies guarantee a fixed income for the rest of your life. So, you can be stress free with an assured regular inflow of funds. Some annuity plans also offer to continue the pay-out to your spouse after you.
The initial investment in this option is huge because of sky rocketing realty prices. However, once invested, rental income can be helpful during retirement. Investing in real estate also has the scope of capital appreciation.
Take up a job or freelance
After having worked all your life, sitting idle can be difficult. Instead why not make money out of something you love to serve dual purpose – efficient use of your time and earn money. Utilise your valuable work experience effectively. Become a consultant, teacher or tutor. In the age of technology, there are numerous jobs available on part-time basis as well that can be done from the comfort of your home.
Exide Life Insurance offers various retirement and pension plans to help you build a corpus for you to enjoy the golden years of your life. Visit our website to know more about the plans and how it can help you plan your retirement.