How to Earn Money After Retirement in India
Knowing how to earn money after retirement in India is important if you want to remain independent in your golden years. There are a number of retirement plan options available for providing continuous income after you retire. Before deciding which plans to invest in, consider other factors such as your retirement goals and corpus.
Determine Your Retirement Goals
Determining your retirement goals from an early age helps you to understand why putting aside savings for your later years does matter. Factors such as independence, what age you want to retire, meeting personal life dreams, and matching your current lifestyle should be considered when planning for your retirement.
Setting retirement goals allow you to calculate how much you need and to invest properly for a steady monthly income after you retire. Having benchmarks along the way commits you to save towards your retirement goals.
Retirement Corpus Calculators
Calculating your retirement corpus requires knowing the number of years you have until you retire, accounting for inflation, and estimating your daily and annual expenses in your golden years. You’ll need to know your life expectancy once you retire as well as income sources post-retirement.
Using retirement corpus calculators ensures you take into consideration all the necessary factors to get the correct amount required post-retirement. It’s a useful tool for planning your investments so that you get the required retirement corpus after you retire.
Determine Your Retirement Income Sources
There are a number of retirement income sources for Indians to consider, allowing them to save and invest their money in preparation for retiring from work. Determining these options depends on your retirement goals and how much steady income you need when you retire.
Identifying potential sources of retirement income gives the retiree peace of mind their essential living expenses will be covered while factoring in unexpected costs such as medical bills.
Sources of Income Post-Retirement
Post-retirement income streams in India include both guaranteed and non-guaranteed sources.
Guaranteed Income Sources
With guaranteed returns on your savings or investments, these plans provide a steady income stream to support your financial needs in your retirement years.
When you reach your retirement, you want to kick back and relax knowing your rewards for a lifetime of hard work will see you comfortably through your golden years. Proper retirement income planning will ensure this happens and having a pension plan is one way of guaranteeing a secure future.
Purchasing a pension plan early in your career requires paying a regular premium which is invested into a fund determined by the policyholder. On retirement, the policy provider will pay out a lifetime pension to the retiree, guaranteeing a steady income post-retirement.
National Pension Scheme (Annuities)
Backed by the Indian government, the National Pension Scheme (NPS) is a voluntary retirement scheme made available to citizens of India aged between 18 and 65 years old. It’s managed by the Pension Fund Regulatory and Development Authority (PFRDA) and lets working Indian citizens contribute to their retirement years.
It works by depositing 60 percent of the corpus into the applicant’s bank account on retirement while using the remaining 40 percent to purchase annuities. This generates a steady income stream for the retiree.
Public Provident Fund (PPF)
First introduced by the National Savings Institute of the Ministry of Finance in 1968, the Public Provident Fund (PPF) was established to offer Indians a tool for growing their savings. The scheme acts as a savings instrument, allowing small investors fair returns with income tax benefits.
This savings-cum-investment vehicle gives competitive interest rates with a 15-year tenure and tax deduction in line with Section 80C of the Income Tax Act. Other benefits include low-risk investments with guaranteed returns.
Senior Citizen Savings Scheme (SCSS)
Another scheme backed by the Indian government is the Senior Citizen Savings Scheme (SCRS.) Designed to help you plan for your retirement years, the scheme is eligible for Indian senior citizens who are 60 years or older.
Its benefits include a higher interest rate compared to other savings plans, tax benefits, substantial returns, premature withdrawal options, and deposit amount flexibility.
Systematic Withdrawal Plan (SWP)
If you’re investing in a mutual fund in India you most likely have the option of a Systematic Withdrawal Plan (SWP.) This feature lets the investor decide the amount they would like to withdraw from their mutual fund at fixed intervals.
The SWP allows the investor to continue investing in their mutual fund throughout their earning years while having the freedom to receive a steady income stream post-retirement.
Non-Guaranteed Income Sources
Non-guaranteed income sources come with substantial returns but at a higher risk. Payouts aren’t guaranteed but diversifying your retirement investment is another way of generating income flow during your golden years.
Stock Investments (Dividends)
Stock investments or dividends are designed to give you long-term growth while offsetting inflation effects. They give you the opportunity to benefit from robust market performance but investors are exposed to volatility at the same time.
Adding stock investments to your retirement portfolio can see you earning dividends well into your golden years. However, it shouldn’t be your only source of income as it does come with risks.
Unit-Linked Insurance Plan (ULIP)
Unit-linked insurance plans (ULIPs) is a long-term investment approach to bolster your retirement portfolio. It includes dual benefits in that if offers both investment and insurance features. Providing both life cover and high returns, a ULIP is a viable option for growing your retirement wealth while offering protection at the same time.
Premiums are divided into two parts, with one part invested into funds and the other going toward the insurance component of the plan. Policyholders benefit from tax deductions on paid premiums in accordance with Section 80C of the Income Tax Act in India.
Investing in Assets
Investment diversification in retirement vehicles as well as within asset classes gives your overall financial portfolio a broad spectrum of income sources. Traditional asset classes include properties, equities, cash, and bonds. Identifying the right financial instrument for retirement income is vital when taking into consideration market fluctuations and risks.
Indian citizens can invest in government bonds, real estate, gold, mutual funds, or fixed deposits for growing their wealth with low- to high-risk features. Knowing your retirement goals and risk tolerance will help you decide which asset investments are right for your post-retirement needs.
Plan Early to Ensure a Steady Monthly Income Post-Retirement
Indian citizens have a number of options available to them when planning a steady monthly income for post-retirement purposes. However, getting the most benefits out of any of the options mentioned in this article requires planning early.
Planning ahead of time lets you make the right investments with your money, giving you peace of mind, you’ll have a steady monthly income after retirement. The more years you spend saving and investing your money, the more your wealth will accumulate for post-retirement. Make sure you invest in the best income sources for your retirement in India!