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Retirement Planning - Chasing Long-Term Financial Goals
Retirement planning is a very essential part of one’s financial life; and it is so heartening to understand that you are giving it a very serious thought. Well, strictly speaking, there is no need to have a separate pension plan or policy if you are not looking for 80C tax benefit. It is just that we need to build a significant corpus by retirement time to satisfy the post-retirement monthly income needs.
Bank interest or monthly capital appreciation withdrawal from a liquid fund over such corpus should actually serve you as an alternative for an annuity payout from a pension plan. How we build that corpus is the next question. It requires a bit of work on your part though - keeping track of good funds, the markets, once-in-a-while gradual switching into relatively safer options. But the very fact that we are doing this for our own selves gives us the boost.
And, during all of the execution, we should pay close attention to the expenses (loads, taxes, impact costs of switching from pension plans, etc.) associated with our investments.
Just like investments, expenses do have a compounding effect, especially while chasing long-term financial goals like retirement, the more expenses we can cut down, easily we can get closer to the goal of achieving a significant retirement corpus.
ULIPs or ULPPs as well as traditional insurance policies are real pocket drainers with 5% to 10% yearly expense ratios; that renders them as misfits for long-term financial plans. All of them especially ULIPs became popular in the past just because of the excessive marketing and advertisements by the finance firms. This is the reason why ULIPs got banned in India. At the end of the day, financial services companies are in their own business and we, as investors, should gauge the quality, economic viability of the products getting sold to us; take a plunge if and only if the merits of buying a product really outweigh the cost outgo associated with it, so there are many things to take in consideration before chasing long-term financial goals such as retirement planning.