Wealth Guide: 3 reasons why guaranteed source of income is essential after retirement

Retirement planning is an unavoidable goal as most people will retire one day. And, while the income stops, the expenses don’t.

In fact, post retirement the expenses are likely to increase further due to rising inflation which results in higher costs of living.

When it comes to planning for a happy retirement, there are plenty of instruments available for investment. However, it is important to choose the right one as not all investments offer a guaranteed and regular income.

To generate regular and guaranteed income after retirement, one can invest in guaranteed benefit plans or assured deferred annuity plans offered by life insurance companies.

Abhishek Misra, CEO & Principal Officer at Bonanza Insurance Broker Pvt. Ltd shares top reasons why it is important to have a guaranteed source of income after retirement:

• To take care of your day-to-day expenses:

In case your monthly expenses amount to Rs 25000 currently, the amount is likely to double or triple after retirement due to increasing inflation. To understand this with the help of an example, let’s take the case of things we use on a regular basis.

In the 90s the cost of a litre of petrol was approximately Rs 35 to Rs 40. Today it costs above Rs 100. Similarly, the cost of 1 kg of sugar has increased to Rs 45 from approximately Rs 20 in the 90s.

Hence, it is important to have a guaranteed source of regular income even after retirement to take care of your day-to-day needs.

• For healthcare:

As we age, our health issues are also likely to increase. Lack of money in such situations means, lack of proper treatment or compromise on the quality of treatment.

However, if you have a regular source of income, you need not worry about the medical expenses and can go for the best possible options according to your budget.

• To avoid emotional and financial stress:

Lack of adequate income after retirement can cause huge financial as well as emotional stress. In some cases, it also results in quarrels among family members, especially when your younger generation is not ready to take care of your expenses.

All this may create an unfavourable emotional environment, hampering your peace of mind.

On the other hand, when you have your own source of guaranteed and regular income, you can live with peace of mind and self-respect without depending on others.

Bottom line

Market linked investments like stocks and mutual funds have the potential to deliver high returns in the long run, but also come with high risks due to the volatility factor associated with equities. 

However, as retirement is an unavoidable event one cannot postpone it under any circumstances due to lack of funds.

It is important to diversify your overall investment portfolio by adding a guaranteed benefit plan or a deferred annuity plan offered by life insurance companies.

It will ensure guaranteed lifetime income to take care of your retirement expenses as long as you are alive.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)