“Essential Tips for Retirement Planning for Women at Every Life Stage”

Retirement planning for the women is important as it provides financial security & mental peace in case of her sudden demise. There are many different pension plans available in India depending on the multiple factors, such as retirement requirements, financial goals, risk tolerance, & personal preferences.

Retirement plans help provide financial support during your post-retirement period, enabling you to meet your post-retirement goals. Women’s have a higher life expectancy, but more challenges as well, such as career disruptions, wage gaps, sabbatical, etc., increasing the importance of retirement planning in women’s life.

Different Pension Plans Available for Women

Provided are the different pension plans available for women:

• Public Provident Fund (PPF)

A Public Provident Fund is a type of long-term investment plan backed by the government of India, offering attractive interest rates along with returns. The amount to be deposited in the fund ranges from INR 500 to INR 1,50,000 each financial year, either in EMIs or lump sum. The amount deposited, maturity amount & interest amount are totally exempt from taxes.

• National Pension Scheme (NPS)

The National Pension Scheme (NPS) is a voluntary contribution pension designed for employees & the self-employed as well. Under this plan, the amount should be invested at regular intervals, some percentage of which can be taken out after retirement. The remaining amount from the corpus can be received after retirement, just like the monthly pension amount. This makes NPS a monthly pension plan, where a part of corpus should be allocated towards annuity, against which a monthly pension would be received throughout the life.

• Employee Provident Fund (EPF)

Under Employee Provident Fund, both the employer & employee contribute 12% of basic salary & dearness allowance to the EPF account. It makes the total contribution 24%. The funds contributed get accumulated throughout their employment, after which they can be withdrawn. It allows total withdrawal of funds post-retirement, though it also allows partial withdrawal before retirement.

• Equity Linked Savings Scheme (ELSS)

This plan best suits those who are willing to accept high risk-reward ratio, offering higher returns along with taxation benefits in comparison to traditional plans

Phases of Pension Plans for Women

A pension plan has two phases:

• Accumulation Phase

During the accumulation phase, an individual is required to make a regular contribution for a specified period of time to build their retirement corpus. The funds are invested in multiple financial product depending on the individual’s risk tolerance level. The pay outs are received from the date as you specified, for example, retirement.

• Vesting Phase

Decide on the vesting age, which means the age at which you want to start receiving the income earned from this plan.This means the policyholder is allowed to withdraw funds, once the accumulation phase gets over. The remaining funds can be utilised to but a deferred or immediate annuity plans to get a regular source of income throughout the retirement tenure.

Hence, women should look for the best retirement plans modify them depending on the policy amount, premium amount, policy tenure, maturity benefits required.

Tips for Retirement Planning for Women

Provided are the tips for retirement planning for women:

• Start Early & Invest Regularly:

If you start with your retirement planning early, your funds will get more time to grow due to power of compounding. It also offers you flexibility to bear the risks that can occur while investing in high-risk investments, such as equity, mutual funds, or stocks. This gives you a longer duration to recover the loss incurred, if any & get higher returns to help you build a huge corpus.

• Define Clear Retirement Goals:

Women should define their retirement objectives clearly considering the factors, such as the retirement age, monthly income, lifestyle, estimated medical expenses, inflation factor, etc. This will lead to a secure, well-planned, & happy retirement.

• Diversify Your Investment Portfolio:

With a well-diversified investment portfolio, it increases financial security & reduces risks. Hence, funds should be invested in varied securities, such as shares, fixed deposits, mutual funds, ULIPs, etc. Also, the funds can be invested in tax savings schemes, such as PPF, ELSS, etc. which will fulfil the long term requirements along with savings in taxes.

• Secure Adequate Insurance Coverage:

Choose a plan that offers an adequate insurance coverage at lower costs, ensuring funds to stay intact & grow enough as much required & planned.

• Build an Emergency Fund:

Consider building an emergency fund, which will fulfil the needs of unplanned expenditures without having any effect on your retirement savings. Women should ideally save funds for at least 6 months in advance in an easy to access fund. Savings in an emergency fund will help you meet circumstances when you are short of funds & unforeseen expenses arises such as job loss, medical expenses, etc.

• Consider Pension & Annuity Plans:

Check for the pension schemes & annuity plans which offer pension on monthly basis post your retirement. To ascertain the amount of funds to be invested today to get your desired amount of pension tomorrow you can also use a pension calculator.

• Plan for Healthcare Expenses:

The older we get, more the need arises to plan for unforeseen healthcare expenses. hence, women need to plan for the unforeseen healthcare & medical costs that may arise in future by investing in health insurance today. Some life insurance plans also can help, but with additional riders taken at an additional costs.

Conclusion

In earlier times, as women used to stay more at home being housewives or not allowed to work, with no time for themselves. But in today’s world, they are more into the working sector, & restrictions have also become loosened. Hence, they can plan their retirement by comparing different plans online, sitting at the convenience of their homes & buying the best one for themselves & their family members. Hence, a women should plan her retirement to get a financially secure future post her retirement. By planning retirement early & making wise investments, they can get a tension free, secure, & happy retirement.