A robust financial plan for retirement will ensure a worry-free life in old age, with adequate funds to cover all necessary living expenses, including medical and other emergencies.  

Fortunately, the market offers many dedicated retirement funds besides the traditional ones, like the Public Provident Fund (PPF), health and life Insurance, Employees’ Provident Fund (EPF), the National Pension System (NPS), and various other term deposit and insurance schemes. 

So, people’s understanding of the schemes and their advantages are crucial to ensure more people join them and achieve financial independence in old age.  

For instance, although NPS is a powerful tool for retirement planning, its awareness is vital to ensuring more people benefit from it. Some people may also find its rules regarding tax, withdrawals, and schemes complex due to the absence of qualified people to guide them.  

Ranbheer Singh Dhariwal, CEO of Max Life Pension Fund Management, says, “This complexity may lead to inaction or a preference for more familiar financial products.”  

Dhariwal stresses, “Highlight the importance of dedicated retirement funds, such as NPS. Promoting the power of compounding and leveraging digital tools to illustrate potential returns can also encourage early investment in NPS” and other plans.  Low Income But Want A Big Retirement Corpus? 3 Tips To Help You

Here are some reasons why we need a retirement plan 

1. Health: As people age, health conditions can deteriorate, requiring adequate funds for medical expenses. 

2. Changing Family Structures: Due to the rise of nuclear families, family support may be less reliable. 

3. Financial Uncertainty: It can be a huge issue if there is no steady income source. 

4. Longevity and Inflation: With longer life expectancies and rising living costs, traditional saving avenues may not be sufficient.  Customise Your Portfolio To Align It With Retirement Goals

Dhariwal suggests the following government-backed schemes to help in retirement planning: 

1. Health and Life Coverage: The Pradhan Mantri Jan Arogya Yojana (PMJAY) is a flagship health insurance scheme providing free healthcare coverage up to Rs 5 lakh per family annually for secondary and tertiary hospitalization. It covers over 10 crore families and offers cashless and paperless treatment in empanelled hospitals. The Pradhan Mantri Suraksha Bima Yojana (PMSBY) is a personal accident insurance scheme covering accidental death or disability, offering Rs 2 lakh coverage for accidental death or total disability and Rs 1 lakh for partial disability. The annual premium is Rs 12, making it affordable for low-income groups. The Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is a life insurance scheme providing Rs 2 lakh coverage for death due to any cause, with an annual premium of Rs 436. 

2. Financial Security: Low-income individuals can secure retirement cash flows through government schemes like Atal Pension Yojana (APY), Pradhan Mantri Shram Yogi Maandhan (PM-SYM), and National Pension System (NPS). APY, PM-SYM, and NPS offer regular income and tax benefits, too. 

3. Emergency Fund: Contributing to small savings schemes like Post Office Recurring Deposit or Public Provident Fund can create a financial safety net. Life insurance companies offer affordable long-term plans combining insurance and savings, such as Endowment or Money-Back Plans, offering returns at maturity. 

4. Wealth Growth Opportunities: The NPS Tier 2 accounts offer a unique opportunity for wealth growth. With low-cost investment options and equity exposure, these accounts enable you to grow your retirement savings according to your financial capacity.  Diwali And Financial Resolutions: A Prosperous New Beginning

Conclusion 

Finally, financial literacy is key to empowering individuals to make informed decisions. Collaborations with NGOs and fintech companies can facilitate savings, enabling people to build a corpus over time. Instruments like NPS are crucial for retirement planning. With awareness, positive mindset, and improved financial literacy, more people can benefit from the retirement schemes and transform and secure their lives financially in their golden years.