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How to Make Proper Retirement Planning in Your 60s?
source: careerguide
As soon as you start your career as an employee, you should start thinking about ways to save for your retirement. The sooner you start saving, the more funds you can accumulate once you retire. Usually, 60 is the average retirement age, and maintaining a good standard of living after this age is only possible through retirement planning in your 60s.
Let us know about retirement planning in detail!
What is Retirement Planning in the 60s?
Retirement planning is a systematic way by which you can accumulate funds to live a good life after retirement without facing any crisis.
Every individual has a unique way of planning their retirement; therefore, no two retirement plans will be identical. However, it is very important to consider all the factors that can affect your retirement savings.
The standard age for retirement is 60. However, there are two other types of retirement: early or late. In early retirement, you work till your late 50s, whereas in late retirement, you work till your early 70s. Irrespective of the type of retirement, it is very important to make a proper retirement or pension plan to enjoy a peaceful old age.
What is the Importance of a Retirement Plan in the 60s?
The importance of investing for retirement in your 60s is as follows:
1. Regular Income Source
With a proper retirement plan, you will be able to create a regular flow of income needed to meet your daily requirements' expenses. With this income, you can pay for groceries, fuel, electricity, etc.2. Family Support
The income generated from your retirement plan can be used to support your family, especially your spouse and children, during financial emergencies. You can also fund their dreams after retirement and create a new source of income from there.3. Medical and Other Emergencies
Another situation a retirement plan assists is during medical emergencies. You can also use the accumulated sum of your retirement plan to fund education, marriage, and other such cases.4. Tax Deductions
Under Section 80C of the Income Tax Act 1961, a tax deduction of ₹1.5 Lakhs is allowed to pay the respective retirement plan premiums. Hence, by reducing the amount of taxes, you will be able to save more for the future.5. Meet Financial Goals
You may dream of getting your own house or a car after retirement. A proper retirement plan will help you accumulate a sum that will allow you to fulfil your dream without any financial restrictions.6. Maintaining Living Standards
Lastly, a retirement plan is important for maintaining the standards of living during your old age. You will want to maintain your standards during this time or later. Therefore, to support it, this policy will provide you with a healthy source of income.How to Save Money for Retirement in the 60s?
The various ways by which you can plan savings for retirement in your 60s are as follows:
1. Automate Savings via Various Schemes
Savings is a very important practice if you want to accumulate funds for your retirement period. However, it might seem easy, but in real saving in a religious manner can be quite difficult. Hence, automating savings by discussing with your respective financial institution is recommended. You can create a recurring deposit account or invest in mutual funds to save religiously.2. Increase the Investment Amount Gradually
While building your retirement corpus, your current income from which you are saving may increase with experience. Hence, with an increase in income, you can increase the investment amount as well. This will help you in creating a strong corpus within a short time.3. Allocate a Fixed Percentage Towards Retirement Savings
If you are able to allocate a fixed percentage of your income towards retirement savings, it will be easier to accumulate funds consistently. This way your savings will not be stagnant for a long time and you will also be able to create the required corpus.How to Invest Money for Retirement in the 60s?
The best way to learn about investment for retirement is through examples. Some famous schemes to invest in for preparing for retirement in the 60s are as follows:
1. Health or Medical Insurance
It is very common to face health issues during old age. These conditions can be both critical and uncritical. However, medical emergencies can wipe out a huge portion of your savings. Therefore, to avoid financial crises, you should avail medical insurance for yourself and your family.2. Senior Citizen Savings Scheme (SCSS)
The Government of India introduced the SCSS in August 2004, and since then, it has been in force. If you are an Indian above the age of 60 are eligible to invest in this scheme for a maximum of 5 years. Here, you can invest up to ₹15 Lakhs at an interest rate of 7.4% quarterly.3. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
The PMVVY is a retirement-cum-pension scheme operated and managed by the Life Insurance Corporation (LIC). Any Indian citizen above 60 years old can apply for this scheme. Here, the minimum investment amount is ₹1.5 Lakhs, and the maximum is ₹15 Lakhs, at an interest rate of 8% to 8.3% per annum. You have to invest for 10 years to receive the accumulated sum through your preferred way of payout.4. National Pension System (NPS)
NPS is a social security initiative by the Central Government mainly for employees from all sectors. Anyone between the ages of 18 and 65 years can invest in this scheme and also get the benefits of tax deductions. Moreover, with this scheme, you can enjoy more earning potential than any other scheme as it provides returns at an interest rate of 9% to 12%.5. Post Office Monthly Schemes (POMIS)
POMIS is a low-risk monthly income scheme controlled and maintained by the Finance Ministry of India. Anyone above the age of 10 years can invest in this scheme, which means it includes minors. You can avail an interest of 6.6% per annum with a minimum investment amount of ₹1500 to a maximum of ₹4.5 Lakhs (₹9 Lakhs in case of a joint account). Here, you have to invest for at least five years, after which you can either keep investing or withdraw your accumulated amount.How Much Should You Save for Retirement in the 60s?
Predicting the exact amount you will require after retirement is impossible as your expenses may increase or decrease. However, there are certain factors that you should consider to note your requirements and hence estimate your savings. Depending on these estimates, planning a retirement in the 60s will be possible. These factors are as follows:
1. Inflation
Inflation is when the price of goods and services increases over time. This may exhaust your savings if you try to maintain your current lifestyle. Therefore, it is essential to consider inflation as an important factor affecting your retirement savings.2. Market Volatility
While creating retirement plans, volatile market factors could affect the value of your retirement assets. If you are an investor who needs to have a diversified profile, this volatile market will affect you more. Therefore a proper amount of savings for retirement will allow you to cope with such a situation.3. Longevity
Although we are not sure how long we will survive after retirement, it is always better to expect more. This way, saving more and enjoying a peaceful post-retirement period will be easier. Moreover, saving more will help you avoid a financial crisis in any situation.4. Any Unexpected Expenses
As you retire, there are chances of facing unexpected expenses. If you or anyone from your family faces a medical emergency, then an urgent need for funds for quick recovery will follow. However, you can also get a separate policy for unexpected situations like medical and other emergencies.
After knowing all the details and measures, you should consider retirement planning in your 60s. Use a retirement calculator if you still face difficulties. It is a free tool available online by various financial institutions to estimate the amount you will get after retirement if invested at a certain time. Therefore, with such estimations, you can make a better financial plan for your retirement period.
FAQs about Retirement Planning in your 60s
Which is the ideal age to start saving for your retirement?
It is always preferable that as soon as you get employed, you should also apply for a retirement savings scheme. However, if you have not started yet to start, the ideal age to start saving for retirement is your early 30s. Starting your savings at this age will help you accumulate a huge corpus by retirement.
Is it preferable to start your retirement savings at an early age?
Yes, it is always recommended to start your savings at an early age. This way, you can accumulate sufficient funds for a comfortable lifestyle after retirement. Moreover, you will also be able to manage funds during unexpected situations without facing a financial crisis.
What happens if you do not start saving early for retirement?
If you do not start saving early for retirement, your lifestyle or standards of living will be affected. Besides this, you may face financial crises during unexpected expenses. Moreover, you will not be able to fulfil your after-retirement dreams due to a lack of funds.
What is the basic eligibility to start retirement saving under any scheme?
Usually, all retirement savings schemes are eligible for Indian residents only and, thus, cannot be used by an NRI person. Besides this, you can apply for a retirement savings plan only if you are 60 or above. However, this age criterion may vary in certain plans where you can start investing early.
Do I still need life insurance in my 60s if I'm retiring soon?
Yes, if you have dependents, unpaid loans, or want to leave behind a financial cushion for your family. Life insurance can also cover medical expenses or supplement your retirement savings.
Is term insurance useful after 60, or should I switch to a whole-life policy?
Term insurance can still be useful after 60, especially if you need coverage for a specific period, like paying off a mortgage or providing for dependents. However, whole-life insurance offers lifelong coverage and a cash value component that can be accessed during retirement. The choice depends on your financial goals and needs.
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Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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