For all of us retirement planning is the most priority goal after our kids education and marriage goals. We are desperate to come out of daily routine work schedule and in need of peaceful retirement life as soon as possible. Few plan to start at as early as 45 years of age and few at the age of 60 years.
At what age you want to retire will be dependable on your choice and your financial life. So if a person planned to retire at the age of 45 years and created the enough corpus for retirement planning then he may start his retirement life. This frustration of starting a retirement life early, is mainly because of the job pressure today’s young generation facing and the uncertainty in their work life. But choosing the right retirement planning and start early is the two key factors in successful retirement planning. So let us discuss this issue in detail today.
Before proceeding further, let us first understand the basic terminologies used in retirement planning products or planning process.
Accumulation phase-This is the period in which you have time to create the retirement corpus. Suppose you are currently at 30 years and you are planning to retire at the age of 60 years then this difference between your current age to retirement is what is called accumulation phase. In this example it is 30 years.
Distribution phase-This is the period where you start to withdraw from the accumulated retirement corpus to survive till your last breath. Suppose you are retiring at the age of 60 years and you are expecting that you survive till 70 years of age then your withdrawal period from 60 years of age to 70 years of age is called distribution phase.
Deffered annuity plans-These are the plans where you start to pay now and till your retirement age and retirement benefit will start from the specified age. Suppose your age is 30 years and if you bought such products then you need to pay from now to your specified retirement age (suppose 60 years). Once you reach your retirement age then these products will start to pay you retirement. Example of such plan is “LIC’s New Jeevan Nidhi“
Immediate annuity plans-These are the plans where you invest lump sum and annuity begin immediately. Such plans are useful for those who are about to start retirement and have created lump sum cash. Example of such plan is “LIC’s Jeevan Akshay VI”
Vesting date-This is the date on which you will start to receive your retirement benefit.
Things that matters about retirement corpus creation–
- Your current age-If you are younger then you have plenty of time to accumulate otherwise no time !!!
- Your retirement age- If your working life is more then you ultimately your retirement corpus size will get reduced. All because of your prolonged working life and lesser retirement period.
- Life expectancy- If your family have higher life expectancy then ultimately you need to be ready for it by creating the corpus. Above all currently irrespective of your family history, due to current medical facilities life expectancy is increasing on yearly base.
- Inflation-This is the real dangerous culprit who eats your retirement corpus at high. Hence you need to consider inflation rate of both accumulation period as well as distribution period.
- Your investment style-If even though your retirement plan is of long term but you still satisfy with low yielding products then it will ultimately affect your retirement corpus creation. Hence choosing the right product is key to success. If you are totally risk averse investor even for long term goals then you have two choices before you a) Increase your investment to achieve the goal or b) reduce your financial goal surplus requirement.
- Your lifestyle-If you have healthy lifestyle then the advantages are that you may postpone your retirement life and by doing so you have less responsibility towards your retirement corpus creation.
- Your spending-If you are living a frugal lifestyle then this habit actually promotes you in creating a retirement corpus which actually necessary for you. By doing so, you can easily divert your investable surplus towards other financial goal.
Unexpected blows which not taken care of any of plans-Even if you bought the best retirement products available in India then there are some drawbacks to all of them. PV Subra listed few of them which are eye opener to all of us
- Your sudden job loss- What if you loose the job and unable to contribute to your retirement planning?
- Your sudden health issues-Suppose you met with accident or face a serious health issue which may stop you to work for few months or years?
- Divorce-Due to this family issue you may face a huge financial burden.
What are the current retirement products available for us?
I will try to classify them as below.
1) NPS-National Pension Scheme is Government backed pension scheme and details of which are available at PFRDA. Best points about this scheme are, your amount is locked till your retirement which ultimately force you to wait till retirement and second point is it’s lowest charges (0.0009% to 0.25%). But at the same time few disadvantages of this plan are, maximum cap of equity restricted to 50% only which ultimately restrict your equity exposure and will impact the return part, mandatory buying of retirement product will be little bit unfair kind of idea, no control over your portfolio, retirement benefit you receive is taxable income as usual to other retirement products.
2) Traditional Retirement Plans- These are managed by Life Insurance companies and are treated as traditional plans. As said above there are two variants one is deffered annuity plans and immediate annuity plans. Best example for deffered annuity plan is LIC’s New Jeevan Nidhi and immediate annuity plans LIC’s Jeevan Akshay VI. In case of deffered annuity plans return on such products are too low that even they fail to take care of inflation cost.
3) ULIP Retirement Plans-Currently these plans may look attractive, but you need to verify the cost and liquidity issue once you reach retirement age. One such plan is from ICICI’s Easy Retirement Plan.
4) Retirement Plans by Mutual Funds-These are funds which are differ from above categories and are managed by mutual funds. Again you need to verify the cost, liquidity, taxation and fund performance of such schemes.
5) Creating on your own-The last and best resort to create your retirement corpus is by creating a portfolio yourself where in you can include all asset class based on the risk appetite and start investing. This is the Do It Yourself kind of solution. But it requires some homework from your end. You can choose the equity, debt (bonds, PPF, EPF or Bank FDs)or gold (ETFs) also to create portfolio and efficiently manage it. The risk involves in such type of activity is, you need to be expert in such type of investments and need to do some study always to manage the money.
Hope above points will be helpful to you in creating the retirement corpus.
Image courtesy of [hyena reality] / FreeDigitalPhotos.net
Hello Basavraj
Nice article.. NPS 60% withdrawal after retirement is now taxfree.
Do u suggest any other investment for retirement which give tax free returns..? (EPF/PPF/MIS has limit for total investment. Pension from pension plan (LIC Akshay/Nidhi) is taxable..I am 50 so can’t invest in SCSS or PMVVY..MF is market dependent and also returns are taxable… ULIPS returns are taxfree but I am not interested in life insurance with ULIP and also ULIP has high initial loading.)
Please advice , as I am looking to invest my VRS amount to get some fixed tax free returns every month for life ahead.
Dear Janu,
What about the remaining 40%? 60% withdrawal is tax-free, then where you invest that? NPS will not provide you pension. You have to buy an annuity, which is taxable.
Hello Basavraj
So please suggest me where to invest my VRS amount to get some fixed tax free returns every month for life ahead. I don’t see much options to invest lump sum and get assured tax free returns every month at this stage of 50
Thanks !
Dear Janu,
Without knowing your complete financial life, I can’t suggest anything BLINDLY.
Hi Sir, Myself Naveen at age 40, researching the best option for Pension at the age of 60. NPS i found best so far, however, your guidance is required. I don’t know much about mutual fund and equity investment and i found them risky as well. To be honest I don’t know much about all financial instrument.
For NPS, i red that it’s backed by Government so it is safe and with good return.
Please advise
Naveen-Refer my post “Top 10 Best SIP Mutual Funds to invest in India in 2017“.
Hello Basu,
I have a query regarding NPS. As I understand it, we can start withdrawing from the corpus after age of 60 is attained. Does the rest amount remain stagnant/it earns any interest/it varies based on the market and fund allocation?
Niraj-NPS will not provide you pension. But from the accumulated amount, you have to buy an annuity. Therefore, it all depends on what annuity you purchase.
Dear Sir,
First of all let me congratulate you for the free financial guidance you are providing to the numerous people. Just I am surfing the internet suddenly I came to your comments site in google and I gone through it and found very useful to me.
I have few queries to ask you. Please guide me about pension plans.
I am working in Middle East for the last 9 years. I am having very meagre knowledge about the retirement pension plans. I am living outside the country and my present age is 41 and planning to retire by 65 roughly (if my health supports till that age).
I have gone with some pension plans but all are confusing me with different plans and tables and I am unable to understand.
From the past savings I have bought an independent house worth around 42 lakhs in my home city. I have also taken house loan and paying every month of twenty thousand rupees/-to the bank.
For pension plan I can roughly invest annual one lakh rupees for 15 years
:-
What will be contribution per month to get a pension of Rs. 10000 to 15000/-
Please guide me the best pension plan to get a handsome pension.
Thanks
Murthy .V
Murthy-Thanks for sharing. Never ever try to buy a product which claims to be meant for retirement or pension. Start accumulating on your own by investing equity and debt based on the proportionate and tenure of goal.
Try to find out the retirement calcualtors online and do your homework by inputting your personal data.
Hi Basavraj,
Do we have any fixed indexed annuity plan in India?
Saikat-You may check with LIC’s Jeevan Akshay VI.
Is that fixed indexed annuity ? I mean is it linked with market?
Saikat-It is not linked to market.
Its immediate annuity Sir. My question is – What is a indexed annuity product in India?
Saikat-Indexed annuity to which index?? I know it is an immediate annuity. May I know your exact requirement?
Fixed Index Annuity Plan similar to this: https://www.allianzlife.com/annuities/fixed-index-annuities. This is attached to market but no way in case market goes down your principle is still safe. I am looking for an instrument similar to this.
The index is primarily govt bonds or treasury bonds etc…
Saikat-As of now there is no such product in India. But do you feel bond market safe to invest??
I thought they were safe, especially if invested in govt securities or treasury. Provided we diversify portfolio across market, asset classes, time and risk.. Your thoughts?
Also, what is your thoughts on NPS(Type 2), I felt it good for 2 reasons:
a. You can diversify and make it a 70:30 bond heavy portfolio and re balance annually.
b. Completely tax free income generation instrument.
Your thoughts?
A good alternative to fixed indexed
Saikat-Govt securities offers you non-default option. But a volatility of interest risk always on your head. We have a misconception that Bonds are safe. But there too you find risk like default risk or interest rate risk. Good question about NPS Tier 2. I just answered the same in a separate blog post. You read it “NPS Tier 2 – Alternative to Savings Account, FDs or Debt Mutual Funds?“.
Hi Basavaraj,
First of all let me congratulate you for the free advice you are providing to the needy. I came to know about your blog by searching in Google for “the best pension plans in India”.
I have few queries to ask you. Please reply when you are free and I am really sorry for the long mail.
I am an NRI residing in Middle east with very little knowledge about the financial planning. For the past 15 years I am living outside the country. I am at the age of 39 and planning to retire by 60 roughly (if I live healthily till that age). I am the only earning member in my family, I have my wife and three school going kids living with me aged 10, 7 and 5. I started thinking about my retirement very early and since then I have been saving a small amount for it. I have approached few people and all pointed in different directions. In the past I have taken few retirement plans from ICICI Prudential and Bajaj Alliance. I have invested almost 20 Lakhs in 3 years. I have to foreclose these policies after 5 years due to the nonperformance of the funds. When they returned the money it was far less than I invested (roughly around 15 Lakhs after 5 years).
From the past savings I have bought a house plot in my home city (worth around 25 Lakhs currently). I have also around 15 Lakhs as NRE fixed deposits in various banks in India. Recently I came to know that depositing in FD’s are not really good due to the current interest rates and inflation trend, hence I would like to know the following
1) What are the best investment plans for the retirement plans
2) How much money I should reserve for a hassle free retirement life
3) I expect a life expectancy of around 85 years
4) Current monthly expenses will be roughly 30k (expected) for me and my wife
5) I have already an investment / investing for the kids education and marriage
6) What are the best invest plan for future? National Pension Scheme or PPF,
7) What is best plan for child education / marriage? Sukanya Samriddhi Yojana, or Recurring deposits, or normal FD’s?
Thank you in advance,
Best regards,
John
John 1) Stor running behind any product which claim to be pension or retirement plan. You MUST create your own retirement corpus based on your time frame. Use equity mutual funds and debt proportionately to accumulate.
2) As much as you can afford to invest. Because it is dead sure goal of your life. All calculations are based on some future assumptions. If anyone criteria fail, then you get hurt. Hence, invest as much as possible.
3) That I already replied.
4) For rest of all, it is hard for me go guide on this public platform.
Thanks you Basavaraj for your reply and suggestions. Could you please explain the statement “Use equity mutual funds and debt proportionately to accumulate” or any link to explain the same.
Best regards,
John
John-You must start equity mutual funds to accumulate retirement corpus.
Thank you for your quick turn around. How do I start investing in equity mutual funds? is there any specific funds I should invest?
I am sorry if this is a nonsense question.
Best regards.
John
Hi Basu,
I am 29 years old married male working as a software engineer. I would like to know about planning my retirement. Currently, I am contributing Rs.24,000/- per year in PPF, I have 1 SIP of Rs. 1,000/- ( Axis Long Term Equity Fund) , EPF contributions are Rs. 4656/- per month (including employer contribution). I am planning to retire at my 58 years of age. I have Rs. 1,50,00,000/- life insurance cover and own health insurance for all my family members apart from employer provided life and health insurance. I am planning to invest Rs.2,000/- per month in NPS under active mode (with maximum exposure for equity till 45 years of my age). Also, I am investing directly in stocks (but the contribution is less). Considering all this, would you suggest if I should go for NPS. Please let me know if you need any further details.
Pawan-I suggest you to create your own retirement corpus than NPS.
Thanks Basu.
But I still have some queries. I am ready to wait till 60 years of my age to get the maturity funds from NPS tier-I account(Just like EPF / PPF with extending the PPF investments after initial 15 years lock in). I think government might make the corpus accumulated as EEE in future than the current EET. What is your opinion about tax on NPS accumulation? I am also looking at NPS as an option to invest 50,000 over and above 80C’s Rs. 1,50,000/- limit for tax exemption.
If I need to create the retirement corpus (of Rs. 2,00,00,000/-) on my own then what should I go for. If its investments in mutual funds with SIP, could you suggest which funds should I choose – 1 each from large cap, mid cap, liquid fund and balanced fund. Also please suggest what should be the SIP amount.
Pawan-You know the hindrance for all pension plans? It is taxation, which no Govt ready to understand. Regarding retirement corpus creation and funds, you refer my earlier post “Top 10 Best SIP Mutual Funds to invest in India in 2016“.
Thanks Basu !
Dear sir,
my age is 46 and I am working in a private firm, may I go for NPS at this age and if yes then what will be my contribution/annum to get a handsome pension after retirement. if there are any other option that also please suggest.
Anjan-Yes, you can go. How is handsome pension according to you? Without knowing that, how can I say that?
Sir,
what will be my contribution/annum to get a pension of 10ooo/- to 15000/- per month?
Ajan-It depends on many things, hard to say like I must know your working age, asset you chose, investment amount and all.
Hi Basav,
I am working with an PSU and would retire after 16YEARS, my organisation doesnt have Pension after retirement. I am single and without any dependant.
I have a flat of my own and is paying EMI against the loan I have taken from Bank. Would you please suggest a suitable Pension Plan for me .
Thanks is advance
P.Sharma
Sharma-Start accumulate through equity mutual funds on your own.
Hi Basavaraj,
I am 30 year old and wanted to invest for better retirement life. I can invest upto 10k monthly. Here mainly 2 points I am focusing on, first, better retirement amount and second the tax saving.
I am planning to invest in Mutual funds (Franklin India Tax Shield, Axis Long Time Equity fund and SBI Blueship (not ELSS) ). I also have PPF account in SBI. I am confused between NPS and SBI Retire Plan Now to invest.
Please can you help me to decide which one is good NPS or Retirement Plan, or any other idea if you have.
Thanks,
Sandeep
Sandeep-Stay away from NPS and any retirement plans. Accumulate on your own through equity mutual fund investment.
hello Basavraj
I am 42 now, would like to invest 1L annual for next 15 yrs, with this investment I want occasional return as well as lumpsum amount after maturity and also pension. would you please advise on this.
Mahesh-Create your own wealth by investing in well-diversified mutual funds rather than depending on any pension or retirement product.
Sir, I can invest an amount of Rs 1 lakh per year for a period of 7 years from now, because I am going to retire after 7 years. Which is the best way of Investment for best ROI after 7 years ? I want 100% sure & fixed income on the investment ( not as NAV based investments such as Mutual funds / share markets nor pension plans which invest in Share markets ).
Raghu-Then why doubt? Use RDs or Bank FDs.
Really nice blog.very informative and useful. This will help people a lot who are thinking of getting their pension plans
Dear Sh. Basavaraj
Greetings
I have gone thru’ your site and the Q&As and congratulate you for rendering such a great services to all
I am a male of 55 years working in UAE and would be most probably going back to India in another 4-5 years time. I have 2 houses in Chennai & Coimbatore with good value as of now.
I have 1 daughter who is 22 yrs old and working here. She would be most probably getting married in another 3 years time.
For me first priority is her marriage expns. which I believe by any conservative calculation would be around 25 lacs. I have some gold for her may be 25 sovereign and have to arrange some 10-15 more which is about 4.00 lacs
Right now I have 5 lacs in FD and would be getting some 40.00 lacs upon my retirement. 3 years from now So having own house I think I may need around 40-50,000 pm there in India post retirement
Request to please let me know what should I adopt to get that monthly income. FD, Funds etc. For her marriage I think I may dispose off 1 house to be comfortable later after the marriage expenses
Thanks for your valued response. I sincerely hope that you will show me the right path for a safe retirement!!
Shankar
Shankar-It is hard to do all calculations and let you deliver the financial planning in such comment section.
OK Sir,
But at least you can guide me with my corpus of say 45.00 lacs after 2-3 years what will be best investment to get monthly income of say 40,000 for my expenses. Will it be FD, Funds or some other instruments which I request you to suggest
Thanks
Shankar
Shankar-See with current corpus, we have to think the inflation adjusted income stream up to your life expectancy. Based on that we have to select the investment avenues. Currently you may satisfy with Rs.40,000. But how you cope up with inflation. Considering the current trend of fixed instruments returns (around 7%), it is hard to get monthly Rs.40,000. You have to think seriously.
Dear Basavaraj,
I am aged 42, planning to retire at 55. Presently I have investment capacity of 1 lac per month.
I have already an investment in PPF, FD, Mutual funds(Franklin-Bluechip, Higher cos, Opportunities, UTI-MNC Fund, Canara Robeco Emerging equities, UTI Midcap, etc) through SIP.
I wish to generate some fix income, other than above after my retirement. Is it advisable to invest in Bajaj Allianz Future gain endowment plan which gives you annuity option, or can you suggest some thing else to generate my retirement corpus.
Also can you advise on a suitable term insurance plan for myself.
Thanking you in anticipation for your valuable suggestion and kindly inform in case any additional information is needed.
Ravindra-Check whether the Bajaj plan at least give you a positive real return (Actual Return-Inflation Rate). It is a typical endowment plan, where you can expect around 5% return. Stay away from such products which combines insurance with investment.
Hello Basav
I am looking for Retirement plan. Now I am at 32 years. I am planning to retire at 60 years. I can Invest up to 5000 Per Month. Which diversified Mutual fund is better for me now. My risk factor is Moderate.
Pradeep-Use one large cap (ICICI OR Franklin Bluechip) and a small and mid cap fund (HDFC Mid Cap Opp or Franklin India Smaller Co).
Hai ..Basavaraj Tonagatti
Thanks for your reply. I came to know that ULIP plans are also good for future investment. How is HDFC Click2Invest Plan. Is it good idea to invest in ULIPs
Pradeep-Please read my earlier reviews of the same “HDFC Life Click 2 Retire online ULIP Plan-Don’t invest” and “Reveiw of HDFC Click2Invest-A cheapest online ULIP“.
Thank you so much for all your valuable guidance..Thank god u started this service and i read it in time…
thanks a lott once again.. god bless you..
HI Basavaraj,
I am a 28 year old IT employee looking to start planning for retirement asap.. I can afford to invest about 150k at a time including a couple of years of advance premium. Would this be possible?
My goal in the long term is to invest about 48k annually for the next 20 years or so and retire before 50.
How do you think I should approach this? Can you recommend a few good plans for me?
Thanks
Vasant
Vasant-It can be achievable, but no PENSION plans. Instead I suggest you well diversified equity mutual fund portfolio.
Hi Basavaraj,
My age is 44 and I am planning to retire at the age of 50. I can invest upto 1 Lakh per year for my future. My expectation is to get Rs.15,000/- per month as pension. Request you to suggest a best pension plan for me. Thanks in advance.
Suresh-Your time horizon is too less. Even if you invest Rs.1 lakh a year then you get around Rs.8 lakh +, and from that it is hard to get such high return expectation from any pension plans or products.
DEAR SIR
WHAT IS INFLATION PROTECTED INCOME. HOW TO EARN IN INDIA AT PRESENT SITUATION. IF WE PLAN FOR RETIREMENT CORPS?
Porwal-If the inflation is around 8% then the investment must fetch you 8% return. Then only we can say that the investment is protecting the inflation. Ideally for long term goals, your goal must be to beat inflation protected return. Returns must be more than inflation. Then only you can survive.
My age is 34 year old….i need a one of cheepest pention plan not more then 3000 per mnth r 20000 thousand annually….ans me on my mail…
Thanx
Mayuri-Sadly there is no such pension plan which I can say BEST and follow it blindly.
hello sir
my name is harish im regular invest rs-150000 for ppf it is best for retirement plan or not pls reply urgent basis
Harish-It depends on YOU and without knowing much about you, how can I judge?
Dear Basav,
I am 38 year old and a private employee. Please guide me about the pension plan, the distribution period, premium, etc needed.
Roshan-Sadly for me no pension plan seems best. I suggest to create your own retirement corpus.
Thanks for guidance sirjee
sir
can u pls help me in my retirement planning if i send u my complete details to ur mail-id
Amar-It is lengthy process to the things. That involves my time and fees too. So let me know your comfort. Otherwise you can visit http://www.freefincal.com and use calculators created by Mr.Pattu and do that for yourself also.
Hi,
I am looking to invest in a pension plan and can invest Rs.20000 per month for the next 156 months. Suggestions on the best route appreciated. My risk appetite is moderate.
Thanks
Ganesh
Ganesh-Best option is to go for well diversified large cap mutual fund and one small and mid cap funds. There is no such pension plan in India which we can say BEST. So you need to create retirement corpus on your own.
Hi,
I wanted to buy a pension plan for my parents who are already 60 years old now. I would be the one paying for the plan.
Could you please help me with some suggestions that I can opt for?
Thanks a lot.
Rupal-You can try LIC’s Jeevan Akshay VI.
Hi Basavaraj,
My age is 33 and I am planning to retire at the age of 50. I can invest upto 1 Lakh per year for my future. My expectation is to get Rs.30,000/- per month as pension. Request you to suggest a best pension plan for me. Thanks in advance.
Umar-Please change your mindset. Because the current expectation of Rs.30,000 is not included inflation. So if you add compounding inflation to it then you need larger corpus than what you are assuming to be suffice. If you have long term goal then please start investing in well diversified equity mutual funds. As far as suggestion, it is best to create your own retirement corpus.
Hi, my name is Kiran resident of USA. I want to know the best retirement plans in India.
Please send your suggestions to my mail id.
Kiran-There is nothing called BEST pension plan unless I know your financial condition.
Hi,
I am Varun , 35 year old and working in MNC at gurgaon. I want to invest into pention plan my budget is around Rs. 7000 per month and I want to retired at 50. So which plan suites me and what will get when I will be 50 years old.
I also invested in Lic Jeevan Saral , gold and in residential land.
Basically my plan is to quit my job at the age of 50 and will start my own business.
Varun-Quitting job at age of 50 years and starting your own is not retirement. The type risk you can take now can’t be able to take at the age of 50 years. So first think and decide about your plan and then we can discuss about retirement.
Hi,
I am ashish from delhi, I want to know about best pension plan for my sister. She is 34 years old now and want to invest around Rs. 5000 to Rs. 100000 per month for this. She want to retired at the age of 46 , so please tell us good plans with risk and without risk both.
and sir we are from upper middle class family so please as per her needs after 12 years.
Ashish-May I know the reason for her early retirement?
because people want to enjoy life not want to work regularly for the whole life…
may be she will retire latter but we want a rough idea, so we can increase monthly premium price accordingly
see insurance agents misguide us because of there own interest. We do not have much knowledge on this
and i read your article and your advice to other and decided to ask you because you are expert
please give your suggestion in figures because i don’t understand by your comment to others.
please give answer according to our requirement and also suggest insurance company and plan in which we have to invest.
we are fresher so guide accordingly
thanks
Ashish
Ashish-All want to enjoy life (without work), but is she ready or anything placed in case of her life span post retirement goes till 100 years? Calculating for requirement involves lot of data like her current income and expenditure, current investment, her financial status, what type risk taker she is and many more. So by mere few lines I can’t say how much and which product suites to her. Insurance for retirement??? Please google the meaning of insurance.
Sorry by mistake I typed Rs 100000 despite of Rs . 5000 to Rs. 10000 monthly range.
Hi Basavaraj,
I came across this site of yours where you have outlined all types of retirement plans lucidly.
Just a few quesries :
1) Which of the 5 categories of retirement funds offer the best returns (%) over a long term period of 25-30 years ? Is it ULIP retirement funds?
2) Also, which are the best and most consisten performing ULIP retirement funds ?
I would very much apreciate your advise
Thank you,
Regards,
Aravind.
Aravind-Last one is the real creator. ULIPs have some constraints like hard to liquidate, expenses and tracking a fund is difficult, which is not case with mutual funds.
Hi Basavaraj,
I am 31years old, and I would like your help to suggest some retirement plan for me, and how much I would need to invest on my annual basis. Right now i have BSLI VISION, LIC JEEVEN SARAL plan.
Requesting you please suggest me.
Rahul-It is complicated calculation which I can’t say with few words like which is best and how much you need to invest.
Hi Basav,
I am an independent working woman, 43yrs of age. I would like your help to suggest some retirement plan for me, and how much I would need to invest on my annual basis.
Thanks
Swati
Swati-Retirement Planning involves lot of data sharing from your end and also calculation from my end. Hence if you are interested then you can share information by mailing to me at [email protected]
Hi Basavaraj,
Just wanted to say THANK YOU for all the guidance.
Thanks & Regards
Saikat
Saikat-You are welcome 🙂
Hi Basavaraj,
Nice to see your article. I need some suggestion regarding post retirement investments.
This month, my father got retired. He has received the PF amount(approx 30 Lakhs).
Can you please suggest the best way to invest this amount so that there is continuous flow of money every month/quarter with proper tax savings. This is the main savings he had, so the risk appetite is less.
Saikat-You can check with LIC’s Jeevan Akshay VI.
Thank you Basavaraj,
WIth LIC Jeevan Akshay VI, I got confused with the kinds of Annuity available. Which should I take (our family : Father(60yrs) & Mother(54yrs) with 2 children(28 yrs and 22 yrs)
Also, if I consider the interest received under this plan is fully taxable, does not the returns calculated yearly is less than a general bank FD for senior citizen?
I am bit confused, please help me out.
Thanks in advance.
Saikat-Choosing option depends on your choice and comfort. Not the interest is taxable but whatever amount you receive as pension is taxable income. Even Govt pension to it’s employees also taxable. As of now there is no ruling that pension should be tax free.
Hi Basavaraj,
I think you took me wrong. My point was whether I do LIC Jeevan Akshay VI or bank FD for senior citizen with interest payable monthly option, in both cases I am not able to use 80C part of IT. Also the returns of both the plans are almost comparable.
Can you please help me with the following questions;
1 ) Can you please suggest Annuity plan we should go for LIC Jeevan Akshay VI(our family : Father(60yrs) & Mother(54yrs) with 2 children(28 yrs and 22 yrs) ?
2 ) Shall I also go for Senior Citizen’s Saving Scheme for some amount? But in this scheme, you can save tax (80 C) only for the present year where you invest.
3) In order to fill 80C every year, shall I go for ELSS? IF yes, which fund will be best according to you? If no, please suggest the best way to full this 80C part. I can go for PPF, but the liquidity is less with locking period of 15 years.
4) Another important question, suppose I have LIC in my name for which I pay yearly premium of 40K. If I don’t declare this 40K in my 80C(I have EPF+PPF which itself is 1 lakh), can my father declare for the same and take 40K amount into his 80C part. I think this is possible whereas vise versa is not for children more than 18 yrs . Please comment.
Thanks & Regards
Saikat
Saikat-Before proceeding further, let me ask you few questions. 1) Do you still feel both the children are financially dependent on your father?
2) What is your father’s tax slab? 3) What is his other source of income?
Your father can treat for tax benefit. But he must show that premium was paid from his source of income.
Thanks Basavaraj,
1) My younger brother is still studying(will also pursue for higher studies) and will need support from my father as well as from me. So, he will be dependent for next 4 yrs.
I have been working since last 5 yrs and is totally independent. I also help my family regularly.
2) Before retirement, we was in 30% tax slab.
3) There are no other source of income apart from government pension approx 15-18 k. It is still not started. So I wanted to plan for my parents properly. We bought a flat recently(used to stay in office quarters) for which maximum savings of father( apart from PF) and mine 5 yrs savings are invested with a small amount of loan, which is given back.
So now I am planning for my second phase of life, I want to make my parents monthly liquidity proper so that they wont have much of a issue.
Thanks & Regards
Saikat
Saikat-1) So in that case we need to consider only one children. 2) I am not asking about before retirement, but post retirement or current status. 3) In that case he can invest some % into equity (I mean not more than 30% of his monthly savings) for tax savings purpose. In my view opting both in part (Jeevan Akshay and SCSS) will be a good option. Also as your father have two dependents with his pension also a another source of income then “Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life time on death of annuitant” will be better option. Because it will give return to your father and afterward to your mother. But discuss with your parents and then decide a suitable choice.
Thanks Basavaraj,
Since my father retired on April 10th 2014, present tax slab is not sure where pension still didn’t started.
Also you suggested 30% of his monthly savings into ELSS, please suggest the best suited fund.
I will go for both Jeevan Akshay and SCSS.(Should I go one of them in my mother’s name in order to save tax on the interest on interest received, my mother is a house wife)
Anyways, thank you very much for the guidance.
Thanks & Regards
Saikat
Saikat-In that case as you planned of going with the discussed plans with both of your parents works for tax liability also. Regarding tax saving you can use Canara Robeco Tax Saver Fund or ICICI Pru Tax Plan or Franklin Tax Shield (must be growth option).
Apart from Equity MFs, FDs, NCDs, (already continuing), I have decided to invest in Low Cost Index Funds for about 15-18 years for my retirement. Am I on the right track?
Samrat-Go ahead.
Can u Pls suggest one low Cost Index Fund? I am a bit confused.
Samrat-Goldman Sachs Nifty is best performing fund with low expense ratio of about 0.54%.
hello basu, I am Priya. Currently me and my husband located in Singapore. And we have plans to settle back in India . Recently, we have purchased a house in blore. Apart from the house investment. What are the other investment options and how best we can manage ?? currently I am not working. please suggest some good investment options which will help us.
Thanks 🙂
Priya-Good to know that you are relocating to India 🙂 Best option of investing depends on lot of things like your current investment, time frame of goals, your risk appetite and your income and expenditure. Hence without knowing these things how can I say any single product which we can claim to UNIVERSALLY best option to invest?
Hi Basu
I’m regular follower of your articles on the blog and happy that I can corelatw few to my needs.
In this case, I need.your advice on what are various child plans availble as of now..I’ blesed with baby boy recently and wanted to plan for his education and misc exo ( like b’day, vacations etc)
Looking forward for hearing from you.
Kiran
Kiran-First of all congrats for the new member entry into your life 🙂 Do simple thing, as you have one more financial dependent into your life, increase your life insurance (pure term insurance) considering the current values of future expenses you need to give from your pocket. Try to differenciate the goals which are long term (like 7+ years) and short term in nature (like less than 7 years). Based on these start investing in the product like RDs, FDs, MFs, PPF. But no insurance plans please 🙂
NICE JOB
Ankit-Thanks 🙂
Good article Basu. I am little negative about ULIP retirement plans. I agree that one need to consider costs involved before making any retirement planning decision in ULIP.
Suresh-Pleasure 🙂 Yes you are right. Because we don’t know how they perform in future.
I feel a ULIP retirement plan is pure speculation.
Its better to stay away from them if you are looking for a retirement plan. A ULIP I think is better as an investment plan.
Dinesh-But after major changes in recent regulations of IRDA, they are equal competitors to mutual funds. Only concern for me is how they perform in future. Because we don’t have track record to judge the ULIP (I mean long term track record like more than 5 yrs, 10 yrs or 15 yrs).
Dear Basav
I agree with you.
However I feel with a pension plan, it best to be conservative and invest in a product that is tried and tested, even if the guaranteed returns aren’t very high. After all if the product turns out to be a poor one, there is no turning the clock back and going back to work once you have retired.
Regards
Dinesh
Dinesh-We need to invest on based on the time left for each goal and how we must beat inflation in long run. Conservative investment style is good, but at the same time if we fail to beat the inflation then we may suffer during our last days. So the answer is, invest in a product which you understand fully and suites to your goal. Continues review of your investment is a good idea to manage your money.