Retirement is something everyone looks forward to. Most salaried workers and corporate employees have a particular retirement age, but retirement planning can be tricky if you’re a business owner. Firstly, your retirement plan would be intertwined with your business plan. Secondly, as a business owner, you should stay involved for as long as possible.
Your retirement investment plan requires careful consideration and strategic financial planning. Therefore, early retirement planning can help you in the long run to ensure financial stability and security in your golden years.
Best Retirement Plans In India For Early Retirement
If you want to know what pension or retirement plans will best suit you, try to determine what you want your life to look like during your retirement years. Your retirement planning can include details like where you want to live, how much that could cost you and what other expenses you might have to pay to maintain your lifestyle.
A good retirement plan can ensure all of your needs are met. Investing in an early retirement insurance plan is in your best interest since you get a more extended period to save and invest more money in a disciplined manner.
Retirement Investment Plans For Business Owners
These are some standard retirement plans you should consider when planning for retirement.
- National Pension Scheme (NPS)
The NPS is a government-backed scheme where you can invest in different avenues. It’s a standard retirement scheme used by corporate employees and self-employed individuals. Note that this scheme will mature only after your retirement or at the age of 60 years.
- Public Provident Fund (PPF)
Another government-backed scheme that offers a safe investment is the PPF. This fund allows you to invest a maximum of ₹1.5 lakhs a year and offers an interest rate of 7.1% per annum. The interest rate is, however, subject to change.
- Unit Linked Insurance Plans (ULIPs)
A ULIP combines the benefits of life insurance and market-linked investment under one plan. It also offers the benefit of partial withdrawal of funds after the mandatory 5-year lock-in period for your various financial needs.
- Pension Plans
Pension plans allow you to receive income during your retirement. Generally, you invest in the plan regularly and receive a regular income after retirement. These are some standard pension plans:
- Deferred Annuity Plans
- Immediate Annuity Plans
- Pension With Life Cover
- Mutual Funds
A mutual fund allows you to invest your money in a fund created by a fund house. Several other investors also invest in the same fund managed by an experienced fund manager. These funds are then invested in marketable securities to earn returns. Here are some types of mutual funds:
- Equity Mutual Funds
- Debt Funds
- Liquid Funds
- Hybrid Funds
When buying a life insurance retirement plan, note that the life cover of the policy will secure your family in your absence. This makes your insurance provider’s claim settlement ratio an essential factor to consider. For instance, Tata AIA retirement plans offer a high claim settlement ratio of 98.53%.
Which Fund Or Plan Should You Choose?
Instead of choosing one retirement plan, diversify your income streams to build wealth. So investing in multiple assets that align with your financial capabilities is what is best for you.
Opt for retirement plans that offer maximum returns on your investment or allow you to save regularly over a long period while guaranteeing a steady income post-retirement. Also, make sure that you consider the inflation rate so that you can grow your wealth accordingly.
Generally, it would be best if you aimed to invest at least 20% of your income. As a business owner, your financial security is riskier than a regular salaried employee, so it’s best to start planning and investing sooner.
Most business owners don’t want to part with their businesses. You may still want to be partially involved in your business management or operations. Even then, you should still consider planning for your retirement.
A good retirement plan will offer you a financial safety net regardless of how you spend your golden years. Furthermore, a retirement plan will support you and your family in any significant financial crisis.