Different Retirement Options You Can Opt For: How to Choose Them?

Financial independence is important for all ages, especially after your retirement. Having a financial plan lets you live a stress-free life without relying on your family. Investing in the right tools at the right time can help you build a corpus for retirement and protect your financial future.

In this digital day and age, you can easily get access to the best plans created for your golden years. Even if you are unaware of the types of plans offered by financial institutions, you can get complete information to make an informed decision.

That said, here are some best retirement plans you can choose to financially secure your old age. 

Annuity Plans

It is a contract between you and the insurance company to provide you with regular income benefits after retirement. With this option, you invest as per your financial capacity. Insurers then invest this money in a non-market-linked security to pay you back the returns.

Also called deferred annuities, it works in two phases. You can choose between regular or lump sum payments during the accumulation phase. This is followed by the payout phase when you start enjoying the benefits through a regular income.

The second phase can last for a fixed period or until the lifetime, depending on the insurance provider. 

Immediate Annuity

As the name suggests, this annuity plan gives you regular payout benefits shortly after investment. This is an ideal option if you are near the retirement age. You can make a lump sum deposit, which is invested similarly to deferred annuities. Here are a few reasons why you need to opt for it:

• You can start earning income within a month after making the deposit
• You enjoy the flexibility of customising your payout frequency
• Options include monthly, quarterly, annual, and bi-annual payouts

National Pension Scheme

If you are looking for a voluntary pension scheme by the Government of India, you can choose this option. To invest in this scheme, you must pay an annual subscription. The minimum investment amount is also nominal, starting from just ₹500 for Tier 1 cities. 

Your funds are invested in various asset classes based on your risk appetite; these include:

• Bills
• Shares
• Government bonds
• Corporate debentures

In addition, you can also enjoy tax benefits on NPS contributions under Section 80C and Section 80CCD of the Income Tax Act of 1961.

Public Provident Fund

This is a long-term investment scheme for salaried and self-employed individuals backed by the government. Here are some of its features you must know:

• You are locked in for 15 years
• It is extendable in the multiple of 5 years
• You can start with a minimum annual deposit of ₹500
• The maximum deposit amount is ₹1.5 Lakhs per year
• It earns you an interest at the rate of 7.1% p.a.
• You have the option to make a partial withdrawal after 7 years
• You can get a loan against it between the 3rd and 6th years
• You can claim a deduction under Section 80C of the Income Tax Act

Atal Pension Yojana (APY)

This is another government retirement plan to provide a guaranteed pension after 60 years of age. Launched on May 9, 2015, this scheme focused on Indians in the unorganised sector. Here are some of its features:

• The minimum age for subscribing is 18 years, and the maximum age is 40 years
• It provides monthly pension from ₹1,000 to ₹5,000
• The investment amount varies depending on your age
• The government co-contributes 50% or ₹1,000 per annum
• In the case of untimely demise, the spouse can continue contributing to receive the same benefit
• You can also add a nominee who will get the outstanding pension after your and your spouse’s unfortunate demise

Fixed Deposit

If you are looking for a low-risk investment option that gives you a lucrative return, then you can consider a fixed deposit. One of the main reasons you can opt for FD for retirement is the elevated interest rate offered to senior citizens.

For example, the interest rate of a Bajaj Finance FD for senior citizens for 60 months is 8.35% per annum. It is 0.25% higher compared to the interest rate of 8.10% for regular citizens. Comparing interest rates offered by multiple issuers is also a good way to get started.

A retirement plan is not just to cover your finances after 60 years of age. It is also a safety net for your family. In the future, you may want to live in a city or wish to move to the countryside for a peaceful life. Depending on the goal, financial requirements will differ from your current lifestyle.

Therefore, it is best that you start exploring options as early as possible. For the National Pension Scheme and Atal Pension Yojana, apply on the government website. For other plans, you can explore the insurance providers online.

This helps you choose your ideal tenor as per your retirement plan to customise your returns. For this, you can visit Bajaj Markets or any other financial marketplace where you can make quick comparisons.