Retirement Planning: 5 best investment options to choose for your old age

Planning for retirement is a very important step in an individual's life as it helps him to save enough to look after themselves in their old age. A pension plan is something that is designed to cater to a person's financial needs for the retirement phase including living costs, medical expenses and household expenditures, among others.

However, one needs to start investing at an early age to accumulate a larger fund and safeguard their retirement life. When it comes to choosing a retirement or pension plan that would help you shape your hard-earned income into savings for your retirement life, there are a multitude of options available in the market. Every option offers different types of returns, interest rates and benefits, depending on the investors' requirements.

Scroll down to learn about retirement planning and the available investment options.

Importance of retirement planning

Making savings or investments helps employees to survive on their accumulated corpus after retirement. However, if not planned accordingly, many may find managing their life difficult and will have to depend on others to cover their expenses. Hence, it is important to identify the right retirement plan and make the right investment.

Investment options for retirement planning

National Pension System: It’s a government scheme that intends to provide social security to the working class including employees from the government and private sectors through a pension scheme. By paying regular premiums, investors can build a corpus fund for retirement. After attaining 60 years of age, the investors can withdraw 60 per cent of the corpus fund and opt for annuity plans with the remaining 40 per cent balance.

Public Provident Fund: Another government savings scheme, the Public Provident Fund (PPF) is a promising investment plan through which individuals can plan their retirement on an attractive rate of return. PPF investments can be made for a duration of 15 years and the account can be opened with a contribution of as little as Rs 500. A maximum of Rs 1.5 lakh can be  invested in a financial year. PPF investments currently offer 7.1 per cent interest per annum.

Mutual Funds: One of the common and popular private investment schemes is mutual funds. As retirement planning is done on a long-term basis, mutual funds can be a good option. The returns are in the range of 12 per cent to 15 per cent a year for investment tenures of 3 years or more. While mutual funds can provide a considerable sum upon retirement, one must consider the market risks associated with it.

Bank Deposits: A traditional form of saving money is making regular deposits in your savings bank accounts. One can also opt for recurring deposits as these allow regular investments along with a higher rate of returns compared to a regular savings bank account. Besides these, one can also make investments in fixed deposits (FDs).

Insurance schemes: Life Insurance plans come with dual options of savings and security. Even many pension plans provide life insurance coverage as well as annuity options. Some of these include SBI Life Saral Retirement Saver, Max Life Guaranteed Lifetime Income Plan, LIC New Jeevan Shanti Plan and Kotak Premier Pension Plan, among others. These plans should be evaluated as per the financial needs of the investor.