What is Retirement Fund

Retirement brings different emotions to different people. Some people rejoice as they become free from their work and family responsibilities. They will get sufficient time to do whatever they like. Although they have reached a phase free from all responsibilities, retirement could stop their regular income source. Pension is no longer a part of the Indian system, be it a government organization or a private company. People cannot entirely depend on their pension or PF, which they saved during their earning span. So, proper retirement planning is necessary for you, especially if you are a self-employed person or belong to the private sector.

Mutual funds for retirement planning

Retirement planning is very necessary if you work in a private company or a self-employed one. Mutual funds are the best investment choice for people who think of retirement planning. Consider a retirement fund to secure your sunset years as it can beat inflation. Besides, it can give you regular income post-retirement.

Retirement funds are specially designed funds that let you save money until you retire. That means you invest a certain amount in your retirement fund on a regular basis. And you start getting a regular income from your retirement funds once your income stops on retirement.

How mutual funds retirement plans are suitable for you?

One of the great attractions of mutual fund retirement plans is they are hybrid in nature. That means the money pooled from different investors would park in both debt and equity markets. Investors can choose either a SIP route or invest a lump sum amount in their retirement fund to secure their future.

These retirement plans have a very simple principle. You invest money in a retirement plan during your working life so that you can enjoy a steady flow of income post-retirement. Withdrawal from these funds is discouraged before your retirement. After retirement, you can either opt for a constant regular income or withdraw the whole amount at once.

How to calculate the required retirement amount

An individual needs to consider several factors while calculating their retirement funds, such as their possible retirement age, rate of return, inflation, and life expectancy. For example, a person in his 30s has almost thirty years to invest or prepare for retirement. He must calculate the corpus considering his annual expense and almost 7% year-on-year inflation in order to maintain financial stability post-retirement.

If your monthly expense is 20000, it would be around 115000 after 30 years considering the inflation. You can use our (an online) retirement calculator to decide the required amount after retirement. It calculates the amount after evaluating several factors like your age, monthly expenses, and possible inflation. You can get an idea about how much you need to save every month to acquire your targeted amount using this calculator.

Benefits of retirement funds

Most working people ignore topics on retirement planning as they feel that their retirement is far away. Many people realize that they have not saved a sufficient amount for their retirement life only when they are nearer to the retirement age. Since you are working, it is certainly the golden period of your life to save your post-retirement life. You can enjoy the following benefits by investing in retirement funds:

Suitable for long-term saving: Retirement funds are a long-term saving option, whether you opt for a lump sum disbursal or monthly pay-outs. You can also invest the income from the retirement fund if you feel so.

It is flexible: These funds provide you the option for a monthly annuity or a lump sum amount based on your financial requirements. Even you have the option to choose a deferred annuity plan to secure a high corpus after retirement.

It gives you protection against inflation: One of the best options to protect your asset against inflation is to invest in a retirement plan. Most retirement schemes of mutual funds offer protection against inflation. So, they disburse only 1/3rd of the accumulated corpus to their investors after retirement. The remaining 2/3rds utilize as a monthly annuity for their investors.

It is a risk-free investment: Retirement funds are a safe avenue of investment for many people because of their low-risk profile. They have the option to invest their money in debt or equity for better returns or in government securities to earn an assured return.

Retaining financial independence is important even after retirement to maintain a comfortable lifestyle. You are free from work but no longer earning after retirement. So, proper planning is necessary to enjoy financial independence post-retirement. Mutual fund retirement plans are a great choice to save money to enjoy a relaxed life post-retirement. These funds are flexible and can protect against inflation. You can get a steady monthly income after retirement if you invest in a retirement fund during your working life.

That’s why Comparte Investment team asks do you have “Nivesh Ki Aadat”.

With this one can say “Mutual Fund Sahi hai”,  so let me do Nivesh