Father’s Day Gift: Retirement Planning

Our fathers are our primary providers. They shape us not only as a person but also make huge contributions and sacrifices to see us become the person that we are. They are our first friend, teacher and disciplinarian. Even though we can never repay what they do for us, we can always help them in little ways possible. This father’s day, we should make the most of this opportunity and help them with their retirement plans. Plan their retirement in such a way, so that their life post-retirement is stress-free and happy.

Steps to plan the retirement:

Calculate monthly cash flow – Once you know the total amount that is earned every month. Make a chart of the expenses under expenses, look for the ones that are important and the ones that can be avoided. You can also give him tips to reduce the expenses and see gauge, how much he saves every month. Even if the money saved is not substantial, every penny saved is also of huge importance.

Help in loan restructuring – When planning his retirement, take into account his loan liabilities. If he has a home loan to pay, check for his interest rate and also scout the market for lenders offering lesser interest rate. If you do find a lender with lesser interest rate, it will not only save a lot of money but also reduce loan tenure.

Help him build an investment portfolio –  It is essential to have a good investment portfolio that will cater to his post-retirement needs. A carefully planned investment in traditional schemes, such as National Pension Scheme (NPS), Bank Fixed Deposits (FDs) and Public Provident Fund (PPF), will secure his future. However, relying only on these schemes may not fetch him more than 8-9%. So, you should invest in other options like, Equity Linked Saving Scheme (ELSS) and ULIPs that give a high return of about 25%.

A ULIP is a great way to save money as it is a mix of insurance and investment. In ULIPs, the insurance company invests a part of the premium in bonds, shares etc. And the remaining balance is utilised in providing an insurance policy. ULIPS allow you to switch your portfolio between debt and equity based on your risk appetite as well as your knowledge of the market’s performance. Benefits like these which offer investors the flexibility of switching is a huge factor contributing to the popularity of these investment instruments. The lock-in period in ULIPs range from 3-5 years, however, you may not reap long term benefits. So, it’s advisable to keep the lock-in period as minimum 10 years.

ULIPs are also a great way to save tax under Section 80C. Moreover, ULIPS allow you to switch your portfolio between debt and equity based on your risk appetite as well as your knowledge of the market’s performance. Benefits like these which offer investors the flexibility of switching is a huge factor contributing to the popularity of these investment instruments. Go through all the options and choose a plan that will suit all your father’s requirements. Happy Father’s Day!

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Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com.