Retirement Plans - Here is how you can save big money for your retirement

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Retirement Plans
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Here is How you can save big Money for your
Retirement
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• Retirement planning is an inherent part of
  financial planning process. Although it is
  considered as very critical goal still most of
  the times people do not keep it on priority while
  saving.
• You may be a 25 year old professional just
  starting your career or a 50 year old nearing
  retirement, retirement planning cannot be
  overlooked. Government sector employees get
  regular pension after retirement. However,
  private sector employees and self- employed
  individuals have to prepare for their golden
  years.
• Therefore, importance of retirement planning is
  increasing day by day for an individual. The
  pre-retirement phase which is also known as
  accumulation phase can be used to plan for
  retirement with various products available in the
  market.
• The proportion allocated towards retirement
  planning in a plan depends upon many factors such
  as, current standard of living, expected
  inflation during post retirement phase, expected
  rate of return from the investments. Let us
  discuss various products which can be used to
  invest wisely for retirement planning.

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• Pension plans of Mutual Funds Mutual funds are
  the best way to plan for retirement. They offer
  liquidity option with minimum charges and are
  successful in creating long term wealth. Till now
  only three mutual funds companies offer pension
  plans, they are Franklin Templeton, UTI and
  Reliance Mutual Fund. While Franklin and UTI
  offer Debt oriented plan with only 40 equity
  exposure, Reliance offer equity oriented plan
  with 60 minimum of equity exposure. The amount
  invested is eligible for tax exemption under Sec
  80 C. Also the exit load is high to discourage
  investor to withdraw funds and stay invested for
  long term.
• Provident Fund There are two types of provident
  funds available in India - Public Provident Fund
  and Employees Provident Fund. Both are popular
  means to save for retirement. Employees Provident
  Fund (EPF) is only for employees of an
  organization wherein the contribution is deducted
  from the salary of the employee. Employer also
  contributes into the funds up to the limit as
  prescribed in the act. Employee can redeem the
  fund once she is out of job after obtaining NOC
  from past employer.
• National Pension Scheme NPS is a defined
  contribution based pension scheme launched by the
  government. The scheme is compulsory for
  government employees and optional for private
  employees and self-employed.

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• Tier I account This account is mandatory for
  all government servants who will make a
  contribution out of his salary and government
  will also make an equal contribution. In case of
  private sector employees there will equal
  contribution from his employer. The withdrawal is
  not allowed before retirement age i.e. 60 years.
  The amount invested into this account qualifies
  for deduction in Income tax.
• b) Tier II account This account is optional
  for government employees in which there will be
  no government contribution. Private sector
  employees can also invest into this account. This
  account permits withdrawal prior to the
  retirement age. No tax benefit is available on
  investment in this account. However, to open this
  account an investor needs an active Tier-1
  account.
• Pension plans of Insurance Many insurance
  companies have launched retirement plans which
  aim at providing pension to the insured after
  retirement. There are two types of pension plans
  unit linked pension plans and traditional
  endowment plans. 80 of the pension plans in the
  industry are endowment plans. However, planning
  retirement with the help of an advisor is
  recommended as different people have different
  risk profile and lifestyle to support savings
  towards this goal.Source http//www.moneycontr
  ol.com/news/retirement/here-is-how-you-can-save-bi
  g-money-for-your-retirement_1286681.html

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