What You Need to Know About Your Retirement Plan Options If You’re Starting Your First Job

When you are in your 20s and 30s, especially at the peak of young adulthood, it can seem weird to fast-forward and think about retirement. Retirement can seem far-off for those in their 50s and 60s to worry about, especially at the start of your career. The last thing you want to worry about is the future when the present feels like all you’re going to enjoy.

But no one financially wise will tell you that thinking about your retirement only when it arrives is sensible. In today’s hyper-independent world, it is almost impossible to remain complacent in your retirement planning and expect things to continue the way they are now.

Unless you have a family fortune to fall back on or are sure someone else will take your responsibility, you need to start retirement planning as early as possible. And starting from your first job is a wise way to do that. The benefits of starting retirement planning early and the retirement options available right from your first job are plenty.

What are the Retirement Benefits of Retirement Planning As Soon As You Start Your First Job?

Here are the benefits of retirement planning:

• First, you understand your long-term goals.
  

  One of the foremost retirement benefits of starting your retirement planning during your first job is the clarity you gain on your short and long-term goals. You can suddenly see the bigger picture in life and identify what is of importance to you, whether it is marriage, higher education, travelling the world, or buying your dream home. You get to decide the type of life you want pre- and post-retirement.

• You start budgeting and saving early.
  

  When you begin a new job, it can be tempting to splurge money and spend it on yourself. But while pampering yourself once in a while is okay, you have to be careful about making it a habit and spending without any aim or restraint.
  
  You must realise that you cannot start retirement planning without tracking your expenses and sticking to a budget. Once you begin identifying your goals, one of the most automatic retirement benefits is that you start to think about ways to save your money for retirement.

• You get a higher return on investment.
  

  The most valuable retirement benefit of early retirement planning is that you get a higher return on any investment, especially with market-linked investments. Most profitable investments rely on the principle of compounding, and compounding only works when your money gets to grow over many years. The higher the number of years, the better other factors are considered. When you start late in life, you are more likely to reap lesser from your investments.

• You can beat the effects of inflation.
  

  With early retirement planning, you can also negate the effects of inflation. As inflation is the continuous rise in prices, what costs you 10% today might cost you 60% more ten to twenty years the line. But early retirement planning helps you become proactive about saving, investing, and finding ways to tackle the price hikes.
  
  That way, you also stay prepared in the face of emergencies that require immediate financial assistance, like medical crises, job loss, accidents, and injuries, among other life-altering scenarios.

What are the Retirement Options Available As Soon As You Start Your First Job?

When you start retirement planning at a young age during your first job, almost all retirement investment plans and tools will be available to you. You will have the time, space, and eligibility to experiment with multiple retirement plans like:

• Retirement plans
  

  There are many types of retirement policies in the market, but you can categorise them into two broad categories – market-linked and non-market-linked retirement plans. Retirement plans are also known as pension plans.
  
  In market-linked retirement plans, your money gets invested into capital market-related instruments, and you get compounded interest returns over the years. In non-market-linked plans, you get compounded returns but at a pre-specified interest rate. A retirement policy can also come with the added component of life insurance.

• Annuity plans
  

  Annuity plans are another category of retirement plans. Annuity plans work on the same principle as other retirement plans and come in market-linked or non-market-linked options. However, the returns you receive in an annuity plan are in the form of regular income payouts lasting your entire retirement tenure.
  
  There are also two sub-types of annuities – immediate annuity and deferred annuity. In an immediate annuity, you receive the income payouts as soon as the annuity plan ends, and in a deferred annuity, you receive them after a delayed period. For an annuity plan to work, you have to pay a lump sum at the start.

• Government schemes
  

  Just as every type of retirement and annuity plan will be available to you at a young age, so will government-offered retirement schemes. Of course, most pension and annuity plans are offered by banks, insurance companies, and other financial institutions.
  
  But there are some retirement schemes offered by the government of India, in particular, to serve the goal of retirement. Some of the most popular government retirement policies include the Public Provident Fund, National Pension Scheme, Employee Pension Scheme, Atal Pension Yojana, and others.

• Life Insurance
  

  Life insurance is one of the best retirement benefits and options available while starting out at a job. Because the younger you are, the lower your life insurance premiums will be. Life insurance is not a proclaimed retirement tool, but it is vital if you want to live a stress-free retired life.
  
  You get to protect your loved ones in your absence and provide them with financial support with life insurance. This will be even more beneficial if you are the sole income earner of your family. With life insurance, you also get to save and grow your money through compounding. Most retirement plans also offer life insurance, but if not, you can get it separately.

• Health insurance
  

  Another retirement option available at a lower cost to you when you are young and beginning a new job is health insurance. Health insurance is not an accumulative financial tool but a protective and essential one. Financial experts often stress the importance of having health insurance to cover the costs of medical emergencies. And given that your retirement age is when you will get exposed to critical ailments, you need to have a financial safety net.

Conclusion

One of the best benefits of starting retirement planning early, especially at the beginning of your career, is that multiple retirement options are available at affordable prices. In addition, you get to unlock various investment benefits and benefit most from compounding when you begin early, as opposed to starting just a few years before your retirement age. To know more about term plan, ulip plan, term insurance, long term savings and more visit PNB MetLife website.

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