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10 Benefits of Retirement Planning

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6 Benefits of Retirement Planning
February 08, 2023

Table of Content

 

Acknowledging the benefits of retirement at an early age will help you create a retirement corpus and generate a regular income. You can devote your spare time after retirement to developing hobbies, travelling, and spending time with your loved ones instead of worrying about finances. Read to understand the advantages of retirement planning at an early age and the various plans available to suit your goals.

Early Bird Advantage: Why Start Retirement Planning Now? 

In the rut of everyday life and profession, most people have very little time to do the things they are really passionate about. Many, therefore, defer these to post-retirement life. 

However, if you have a certain degree of financial freedom before retirement, you can enjoy peace of mind after retirement. 

It is, therefore, crucial to understand the undeniable advantages and benefits of retirement-related planning when done from an early age. Here are a few of them to consider:

  • You can derive the advantages of retirement planning at lower premiums if you invest when young and healthy.

  • You will be able to build a significant and more than sufficient retirement corpus when you start early and proceed consistently. 

  • You can build a competitive portfolio that will give you the confidence to enter the retirement stage of your life.

  • A collateral will be available for loans when you are in need of funds.

  • The investments started in the prime of your life will take care of your needs upon retirement, paving the way for financial independence. 

Top 10 Benefits Of Retirement Planning

With many of us now hoping and aiming to retire early and check things off our bucket lists, the importance of retirement planning is much stronger than ever before. Only by starting early and having proper financial planning in your 20s can you set the stage for a peaceful and stress-free retired life. 

Here are the top 10 benefits of retirement that you should know.

1. Financial Security For Emergencies

While assessing the importance of retirement planning, you should consider financial emergencies. The need to have funds to meet medical emergencies will be higher as age advances. With the steep increase in treatment expenses, investing in health insurance for you and your family or setting up an emergency fund will be the best way to be financially secure post-retirement.

2. Inflation Protection

With rising inflation, the cost of living also goes up, and it will be difficult for you to maintain your existing lifestyle in the absence of retirement planning. Equipping you to beat inflation without compromising on your lifestyle is one of the advantages of retirement planning.

3. Peace of Mind

One of the most important benefits of retirement planning is peace of mind. Having financial freedom even when the regular income stops is the crux of retirement planning Factor your mandatory expenses, the need for emergency funds, the financial goals, etc, while investing for your future. With the right choice of investments, you can avoid financial shortfalls later in life.

4. Tax Benefits

With a strategic investment plan, you will be eligible for multiple tax benefits. The contribution towards pension plans can be deducted from the taxable income. Similarly, the maturity benefits of some retirement plans are tax-free. The savings on the tax will make provision for further investments.

5. Healthcare Security

Including health insurance in your retirement plan will come in handy in old age when you are more vulnerable to health issues. Health insurance1  will cover most medical expenses, allowing you to relish your golden years without financial stress. Healthcare security is one of the best advantages of retirement planning.

6. Cost-Savings

If you acknowledge the importance of retirement planning early in life, it will be cost-effective. An investment plan will be more lucrative when you give more time. Staying invested in a plan for extended periods will give higher returns. You get your financial security with lower premium rates if you start planning early. 

7. Legacy Opportunities

Your priorities undergo vast changes in every life stage. Passing on a legacy can be most satisfying. Leaving behind a significant fund is among the most rewarding benefits of retirement planning. Start investing early to create a substantial retirement fund and use it as you desire later in life.

8. Returns on Investment

The longer you stay invested in these investment options, the higher the returns. Retirement planning helps in saving as well as creating wealth. Choosing the right investment plan at the right time, depending on your financial profile and risk appetite, is the mantra. You can get higher returns with small subscriptions/premiums if you invest when young and actively employed. 

9. Early Retirement Option

If working till the actual retirement age is not on your agenda, then planning for retirement is more pertinent for you. Investing strategically to create a sufficient retirement corpus and generate regular income will give you an early retirement option. With financial freedom and independence, you can retire in style early in life.

10. Protection of Assets and Property

If your financial goals are not in place, you are likely to face a severe financial crisis post-retirement. You may have to sell your assets and properties to provide for emergencies post-retirement. 

Therefore, a structured investment plan when you are young will help you reap the benefits of retirement and save you from the ultimate situation.

How To Select A Suitable Retirement Plan?

Considering the following aspects will help you select a suitable retirement plan:

  • Understand your needs post-retirement

  • Determine the time gap between the start of investment planning and the retirement stage.

  • Determine your financial goals and invest accordingly

Conclusion

A financially secure and peaceful retirement is the outcome of a meticulously planned saving strategy when employed. Invest in the right plans and time and reap the benefits of retirement later in life.

FAQs on Benefits of Retirement Planning 

Q. How do I benefit from retirement income?

Financial freedom and a stress-free life are the benefits of retirement income.

Q. Can retirement planning take care of medical expenses?

Including health insurance in our retirement planning will cover the medical expenses when you need it the most.

Q. How do we assess the investment amount in retirement planning?

Your income, lifestyle, and financial goals are the yardsticks to determine the investment for retirement planning.

Q. When should I start saving for retirement?

For high returns at low costs, it is recommended to invest as soon as you start earning.

Q. Can investment in EPF alone take care of post-retirement expenses?

EPF is a good investment option. You can create a retirement corpus, but EPF alone will not cover your expenses when your regular income stops.

Q. What is the 30:30:30 concept in financial planning?

The 30:30-:30 concept is 30% of your income for mandatory monthly expenses, 30% for lifestyle expenses, and 30% for savings.

ARN - ED/01/24/8145

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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