5 Things You Must Know About Retirement Planning

A survey conducted by IPSOS Mori https://www.ipsos-mori.com/in 2015 found that about 44% of the Indian participants either did not start their retirement saving or stopped savings mid-way. 10% of the participants do not have any clue or information about retirement planning. Thus it shows Indians are mostly not aware about retirement planning.

Though India is comparatively a young nation with the median age under 30 years, we also have around 100 million population above 60 years of age. This is expected to triple to 300 million by 2050. Thus, this can become a huge economic challenge for India if we do not start retirement planning from an early age.

Knowing the following 5 things may make your retirement planning easy.

During your working life you worry about earning maximum and fulfilling duties and responsibilities. You earn and spend according to a monthly budget. But, what you probably ignore is life post-retirement and the impact that inflation could have on your future expenses.

Let us see what could be your annual household expenses post retirement if we account the inflation

Current Annual Household Expenses	Annual Household Expenses post retirement after 20 yrs (6% inflation)	Annual Household Expenses post retirement after 25 yrs (6% inflation)	Annual Household Expenses post retirement after 30 yrs (6% inflation)
Rs 4.00 Lakhs	Rs 12.83 Lakhs	Rs 17.17 Lakhs	Rs 22.97 Lakhs
Rs 10.00 Lakhs	Rs 32.07 Lakhs	Rs 42.92 Lakhs	Rs 57.43 Lakhs
Rs 15.00 Lakhs	Rs 48.11 Lakhs	Rs 64.38 Lakhs	Rs 86.15 Lakhs

You can see in the above chart, your current annual household expenses of Rs 10 Lakhs could be as high as Rs 32.07 Lakhs, Rs 42. 92 Lakhs and 57.43 Lakhs respectively after 20, 25 and 30 years post retirement!

Therefore, depending upon when you plan to retire, you must start accumulating a retirement corpus based on future expenses and not on current expenses.

Contingencies might come in the form of sudden illness of your aging spouse or you. What do you do in a situation like this when you don't have a stable source of income? Hence, in order to avoid this problem you must create an emergency fund which can be liquidated any time if the need so arises.

With age come various critical ailments. It might be difficult for you to pay huge hospital bills or meet expenses while recovering at home. Buying a good Mediclaim plan for self and spouse at an early ageat cheap premium makes sense. Over and above that, you must also buy a health insurance plan covering all major critical illnesses.

During your golden years you must enjoy life by planning for your leisure and entertainment expenses. A small amount saved during your working years can help you accumulate a big amount for this purpose. Having a leisurely and good life for you and your spouse must be a priority during retirement.

Retirement planning on paper will not help as you need to start saving for it. Insurance companies offer various pension plans such as deferred annuity, immediate annuity, with cover and without cover plans, life annuity, pension funds etc.

Retirement plans in India offered by various life insurance companies are such plans wherein the company provides a stream of annuity payouts to you. Such annuity payouts are provided out of the funds contributed by you either in lump sum or in installments during your earning years. Annuity payouts are paid throughout your lifetime. Some pension plans however, continue the annuity payouts to your spouse after your death.

During these years, when you are not earning and start retirement life, a regular income through insurance annuity plans could be most helpful.