Retirement Planning: Why it is important? What are its benefits?

In today’s fast-paced world, people are so busy with their jobs and immediate needs that they forget about retirement planning. Many young professionals may feel like retirement is far off on the horizon. In truth, the time comes quicker than one can imagine. Retirement planning may seem like a task to put off for another day, but it is extremely important. A solid income source, once you finish your career, can make quite a difference in the later stages of your life.

Why is planning for retirement important?

Planning for retirement is the best way to ensure that one’s finances are secure even after income sources have dried up. The cost of all goods and services will increase over the years. There is a possibility that a person’s medical expenses will also see a rise in time. In such a situation, it is imperative that one plans out their post-retirement life in advance. There should be clarity regarding where you can invest and what you might need later on so that you can chalk out an outline about what is required.

With careful planning and adequate savings, you can ensure that your post-retirement life will be free of any financial burdens.

The amount of money you will need for your post-retirement lifestyle will depend on whether you have any pending loans or liabilities, your retirement age, medical history, and any other financial goals you have. You will also need to take inflation into account and plan according to the expected rise in goods and services.

The Public Provident Fund and National Pension Scheme are some plans to start investing in if you want to start preparing for your retirement.

What are the benefits of retirement planning?

Tax benefits: Retirement plans like the Public Provident Fund offer tax benefits of up to Rs 1.5 lakh per financial year under Section 80C of the Income Tax Act.  Plans like these are a good choice for retirement planning and function as long-term investments.

Financial backup: Having investments under a well-thought-out retirement plan means that an individual will not have to worry about where to arrange money in case of any financial emergency.

Regular income after retirement: If you invest well, you can end up with a steady source of income even after retirement.

Will help meet financial goals: If you have any dreams that you want to fulfil after you have stepped down from work, your post-retirement savings can come in handy. But, this will be possible only if you plan ahead and take your goals into account while planning for your retirement.