Skip Navigation
0 of 0 Displaying
 |   Displaying

No Results

    FAMILY PROTECTION

    Things to consider before using your retirement corpus to fund your startup

    Last Updated On 19-02-2020

    Everyone has their unique ideas and dreams, no matter their age. And if you were to ask a growing number of professionals today about their post-retirement plans, you are likely to hear an interesting answer: launching their own startups. This is unsurprising, given that we live in the age of the entrepreneur and the many opportunities that will be available for startups to grow and thrive in the future as well.

    However, when looking at this dream practically, the age-old question pops up: how will you finance this post-retirement startup? In the absence of a regular income and with the constant need for funds for your new business, most people might be tempted to go for their retirement savings. Here are some essential points for your consideration before doing so. 

    The Challenge: Using retirement corpus for your startup

    While you are still generating a regular income, you are likely to save up enough money in the retirement corpus of your choice for a rainy day. Which is why it is natural to resort to this corpus - be it your EPF or PPF - to fund your dream of launching and running your own startup. After all, this is exactly the kind of opportunity that you had financially saved up for, right? 

    However, while a corpus for retirement is generally created to save up for a number of purposes, planning for a new business is quite a different ball game altogether. Consider this: your retirement corpus might be perfect for your post-retirement life and the many needs that might pop up at that time. This corpus would help you live comfortably in your own house, provide for your lack of income by paying the necessary bills and making all required payments. 

    However, this retirement corpus might not be well-suited to meet the demands of a new business venture as well as the many risks that come with it. After all, in most cases, startups do not generate a profit in their first year. Some might even go without profit for up to three to five years. This means that not only will your startup require constant financial inflow, it might also fail to generate any income for you for a considerable amount of time. Your EPF or PPF retirement corpus is not equipped to deal with these types of financial risks and in the absence of an income, you might find yourself falling deeper into debt.

    Moreover, you might find that prematurely withdrawing your corpus for retirement via PPF or EPF might pose a certain challenge. While these funds are eligible to be withdrawn for specified purposes such as financing education plans or the marriage of someone in your family, they are restricted from being withdrawn for other purposes. These include funding a post-retirement startup. 

    The Solution: What you can do instead

    Of course, the challenges presented above should not discourage you from following your post-retirement dreams. After all, they are merely a word of caution against using your corpus for retirement to fund your dream startup. Hence, rather than seeking your EPF or PPF as a source of finances for your business venture, it is ideal to preemptively invest in a separate retirement plan instead. 

    Retirement plans are typically accumulated funds that you can build up over time, much like your EPF and PPF corpus. Moreover, these plans come with an additional benefit of insurance coverage as well. These plans are a great resource for you to invest monthly premium payments into and allow them to accumulate over time. You can even pay a lump sum investment at once and watch it grow over the remaining accumulation period. 

    The corpus generated at the end of the retirement plan is certain to provide you with the financial independence you need to make post-retirement decisions such as launching your own startup. Your other retirement corpus, such as PPF or EPF can serve as a safety net to take care of your regular post-retirement needs. Meanwhile, retirement plans can offer you the financial freedom you enjoyed while you were still a salaried individual and fund your business without placing your future in jeopardy. 

    Apart from investing in a retirement plan, it is also essential to avail a term insurance plan in order to safeguard your family’s future and their financial needs. To know more about Life Insurance, browse the website for various Term Plans offered by PNB MetLife. 

    Sources:
    https://www.moneycontrol.com/news/business/personal-finance/should-you-fund-your-startup-with-your-retirement-corpus-2431375.html
    https://cleartax.in/s/pension-plans

    *Tax benefits are subject to conditions and other provisions of the Indian tax laws and are subject to amendments made thereto from time to time.

    Disclaimer:

    The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.

    PNB MetLife India Insurance Company Limited, Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka.
    IRDAI Registration Number 117. CI No: U66010KA2001PLC028883. For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding the sale.
    The marks “PNB” and “MetLife” are registered trademarks of Punjab National Bank and Metropolitan Life Insurance Company, respectively. PNB MetLife India Insurance Company Limited is a licensed user of these marks.
    Call us Toll-free at 1-800-425-6969.. Phone: 080-66006969, Website: www.pnbmetlife.com, Email: indiaservice@pnbmetlife.co.in or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra. Phone: +91-22-41790000, Fax: +91-22-41790203

    AD-F/2019-20/00346

    BEWARE OF SPURIOUS PHONE CALLS AND FICTIOUS /FRAUDULENT OFFERS
    • IRDAI is not involved in activities like selling policies, announcing bonus or investment of premiums. Public receiving such phone calls are requested to lodge a police complaint.

    All about Claim Settlement Ratio | PNB MetLife

    FAMILY PROTECTION

    Today the world is full of uncertainties. In such apprehensive times, you worry about your family’s well-being in your absence. This is the reason ...

    Celebrate Diwali with Life Insurance | PNB MetLife

    FAMILY PROTECTION

    Diwali is the festival of lights, merry and cheer. It dispels the darkness with light and stands for prosperity as well. This festival acknowledges...

    FAMILY PROTECTION

    While Buying A Term Insurance, Be Careful Of These Common Mistakes

    Term insurance is a type of life insurance. Only if the insured person passes away while the policy is active, the nominee of that term insura...

    Read Why You Should But Life Insurance | PNB Metlife

    FAMILY PROTECTION

    Living Your Life Young and Carefree? Then, you need insurance!...

    FAMILY PROTECTION

    Why Women Should Be on the Forefront in Family's Financial Decisions?

    A modern woman wears multiple hats- from a loving daughter and nurturing wife to a selfless caregiver and hardworking employee. Apart from meeting ...

    Want to know more about how you can protect your family?

    See all our articles

    Get a Callback

    OTP sent successfully

    Thank you for getting in touch with us. We will contact you shortly.

    Disclaimer

    Collapsed Expanded

    As your trusted life insurance partner, PNB MetLife is with you amidst the current COVID-19 outbreak. Our policies also cover COVID-19 Claims. In case of a Death Claim, kindly submit the signed Claim Intimation Letter mentioning the policy number, brief of the insured event and other claim documents on the email mentioned herewith. Please write-in to us at claimshelpdesk@pnbmetlife.com or indiaservice@pnbmetlife.co.in. You can also call us on 1800-425-6969 for death claims intimations and for any queries on Monday - Saturday between 10:00 am - 7:00 pm.

    PNB MetLife Insurance, amongst the trusted Life Insurance companies in India, aims to provide a wide range of Life Insurance products that suits the needs of an individual at every stage of his life. Life Insurance Plans range from Term Life Insurance PlansTerm PlanProtection PlansLong Term Savings Plans , Retirement Plans & Child Education Plan.

    Site best viewed in following browsers
    Chrome 70+ , IE 11+, Firefox 76+, Safari 11+

    Get a Callback Get a Callback

    Ask khUshi

    Hi! I’m khUshi. How can I help you?