What Are New Age Retirement Plans

De-regulation is in the air, so one should not be surprised at how retirement planning will be affected in the future. Mutual funds were thought to be bullet proof, asset allocation would keep us safe. The purpose of a retirement plan is supposed to provide a guaranteed lifetime retirement income.

Traditional defined contribution plans are focused on rates of return, account values, and market volatility. Banks use a financial management approach called Asset Liability Management. But there are tax deferral assets such as insurance that have benefits that can stand up with any investment product.

Why Is New Age Retirement So Important?

The following points describe why new age retirement planning is important - 

• Inflation

Inflation is when the value of money goes down over time. If inflation is 5%, Rs 100 will only be worth Rs 95 after a year. Your needs will stay the same, but your money won't be worth as much. Inflation is a big problem, so it's important that your money grows over time. When you decide how to invest your money, you must take inflation into account.

• Getting Interest Rates Lower

Traditional sources of income for retirees have included bank fixed deposits and government small savings programs. In the last few years, the interest rates on small savings accounts offered by the government have dropped dramatically. Saving more and building a bigger nest egg will allow you to retire with an income sufficient to satisfy your demands.

• Pension Post Retirement

Most people in India don't have a pension. India doesn't have a national pension plan for people who work in the private sector. They have to save and invest regularly while they are working in order to have their own source of income after they retire.

New Age Retirement Plans Everyone Should Invest In

Here are some new age retirement  plans -

• Mutual Funds

1. Return on investment is important for generating wealth. By investing in a mutual fund, you can spread your risk across a larger number of asset categories, which may increase your returns.
2. Long-term statistics show that equity is the best performing asset class and can develop wealth for investors. 
3.  SIP allows you to invest your monthly savings in a mutual fund plan based on your financial needs and risk appetite.  
4. SIPs are disciplined because they encourage you to track your expenses and invest regularly.  SIPs in equities mutual fund schemes average your purchase cost by using stock market volatility (Rupee Cost Averaging)

• Atal Pension Scheme (APY)

1. Atal Pension Yojana is a government programme for the disorganized sector's social security.
2. Under this pension programme, contributors would get Rs. 1,000, Rs. 2,000, Rs.3,000, Rs. 4,000, and Rs.5,000 per month. Pension based on contributions will be received at 60. 18-year-olds can start investing, and 40-year-olds can join. They can donate till 40.
3.  After six months, an investor's account is frozen. The account will be suspended after 12 months and terminated after 24.
4.  The APY contribution is tax-deductible up to INR 1.5 lakhs under section 80CCD (1) and an additional INR 50,000 under section 80CCD (2). (1B). The scheme was designed for the developing world, however anyone can invest and get retirement income. APY can help retirees supplement their income.

• The Public Provident Fund

1. Post office savings include the PPF. 
2. PPFs have 15-year lock-in periods. PPF investments can be extended for five years.
3. The PPF is tax-deductible. Section 80C of the Income Tax Act allows a Rs 1.5 lakh tax deduction. PPF returns are tax-free. 
4. Minimum PPF investment is 500 and highest is 1,50,000.  Multiple accounts are prohibited.  Annual compounding occurs.
5. 15-year lock-in for PPF. 
6. Early PPF investment ensures a stress-free retirement.

• Pradhan Mantri Vaya Vandana Yojana (PMVVY)

1. PMVVY is a senior pension plan. Government-run Life Insurance Corporation (LIC) handles the scheme.Government of India backing assures returns. PMVVY's ten-year return is 8-8.3%. 
2. The pension is paid monthly, quarterly, or annually.Minimum purchase of INR 1.5 lakhs guarantees INR 1,000 monthly pension.Maximum purchasing price of INR 15 lakhs ensures INR 10,000 monthly pension. 
3. The ultimate pension and purchase price will be paid in 10 years. PMVVY investments aren't tax-deductible under Section 80C. Individual tax rates apply to scheme returns.

• Senior Citizens Savings Scheme (SCSS)

1. Post office Senior Citizens Savings Scheme gives investors security and a consistent income. It reduces taxes. It's a low-risk investment for retirees. 
2. SCSS is a low-risk investment for investors who understand it. Senior Citizens Savings Scheme investors seek stable returns and regular income. 
3. SCSS lock-in lasts five years.
4. SCSS pays interest quarterly. Interest is 7.4%. 2021). The collected interest is paid in January, April, July, and October.
5. Multiples of 1,000 rupees are required. SCSS account maximum is INR 15,000

• The NPS (NPS)

1. Government-regulated, low-cost retirement plan.
2. Section 80C and 80CCD(1) provide up to Rs 2 lakh in tax deductions.
3. Subscribers can choose a fund manager or design their own portfolios.

When you retire, you can take some money out and utilize the balance to buy an annuity.

Conclusion

Retirement plans are an annuity for medical and living expenses after retirement. These programs might help you plan your spending and secure your future so you can spend your retirement years independently. Such retirement plans assist you in building a long-term corpus for post-retirement independence. Retirement programmes require monthly or lump-sum investor contributions.

Also read: Advantages And Disadvantages Of Buying Pension Plans

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