My Retirement Goals

retirement

“It’s better to live rich than to die rich”.

How do we know that when we hit sixty-five or seventy or eighty, there will be a skill that can throw off an income? We need to create a retirement corpus so that by age sixty we are financially free. A person is financially free when you don’t need to work to pay your bills. You should have enough assets that generate enough income today and for the rest of your life. We all know inflation is relentless, and even when the rate of inflation falls it does not mean that prices go down. They just rise more slowly. Getting the right amount of retirement is not tough to crack.

At the age of twenty-five save 25 percent of your post-tax income, at age thirty save 30 percent of your post-tax income, At forty save 40 percent. This formula works if you don’t have a single rupee saved towards your retirement, till you are forty.

Here are the retirement plans one should invest for better returns.

1. NPS(National Pension Scheme)

The national pension scheme is initiated by the central government. This scheme is where a person needs to invest in a pension account at regular intervals when the employee is working. This program is open for employees from private, public, and even for those who are working in the unorganized sector. After being retired the person can withdraw a certain amount of percentage of their funds. Wherein the person gets benefit under section 80C and section 80CCD. This scheme is portable across all the locations.

Types of NPS account

There are basically two types of NPS and they have the tire I and Tier II.

Basic information for a Tire I

  • There is no limit of the Maximum NPS contribution.
  • The maximum NPS contribution should be Rs. 250 or Rs. 500 or Rs 1000.
  • One can get tax exemption up to Rs 2 lakh (Under 80C and 80CCD)
  • There is no permit for withdrawals.
  • The status of the tire I account is Default.

NPS Tier II account

  • There is no maximum limit for NPS contribution.
  • The minimum contribution should be Rs. 250
  • There is tax exemption up to 1.5 lakh for government employees other employees.
  • For withdrawals, you are permitted here.

NOTE: The tire-I account is mandatory for everyone who opts to invest in the NPS scheme. The central government has to contribute 10% of their basic salary. For the rest of everyone else, investing in NPS is their call.

How to open an NPS account:

NPS account is been regulated by PFRDA, one can go for online as well as offline to open this account.

Offline process

The person needs to pay a fee of Rs. 125 for this.
One needs to make an investment not less than Rs. 250 or Rs. 500 or Rs. 1000 annually.
To open the NPS account manually, one should find PoP- point of presence.
Remember one should update their KYC papers in a bank.

Online process

One can invest in NPS through MyWay Wealth.
All that you need to do is download MyWay Wealth app, which is India’s most trusted app, update your KYC and start investing your funds in NPS.

MyWay Wealth app

2. Senior citizen savings Scheme (SCSS).

The senior citizens saving scheme is a scheme protected and backed by the government of India to provide regular income for senior citizens of India. Since it is provided by the government of India, this scheme is tax-free, which is been preferred amongst the retired audience.

Who can invest in these?

  • Senior citizen of India is eligible for SCSS.
  • Senior citizens of India aged 60 years or above.
  • Retirees who have opted for voluntary retirement scheme (VRS). Or superannuation in the aged bracket 55-60.
  • Retired defense personnel with a minimum age of 50 years.

Note: HUFs and NRIs are not allowed to invest in this scheme.

What should my investment amount be?

1. The minimum amount required for investment is SCSS is Rs 1000.
2. The maximum amount should be lower of the two:

  • An individual can invest up to 15 lakhs.
  • An individual can invest the amount received as a retirement benefit.

If its joint account with a spouse, then the maximum amount is 30 lakhs.

The interest rate on the SCSS account.

Interest rate

How to open an account in SCSS?

  • SCSS account can be opened in any authorized bank or post office.
  • First, the person has to fill a document for opening an SCSS account.
  • Proof-like PAN card, a passport to be presented
  • Two passport size photos.

Note: have original identity proof for verification.
Hence it’s clear that NPS provides all the features that SCSS can provide. Also, NPS allows you to earn returns anywhere between 9-15% whereas SCSS helps you earn between 8-9%. Why miss out on the opportunity to earn those extra returns? Additionally, NPS provides tax benefits where one can secure the future after retirement. You can invest your funds through MyWay Wealth after all one should spend their retirement peacefully.
Invest in NPS on MyWay Wealth and enjoy a tension free retirement.

Investing towards Retirement - Dipika Jaikishan

Investing towards Retirement

Do not delay investments for your Retirement. Investing early will help you to build a large corpus that would make sure you are financially independent and secure during your Retirement Days. You have worked hard, now its time to make it work you.

Retirement Plan

Pension or Annuity for your retirement corpus?

Pensions and annuities are two great kinds of retirement income. But don’t confuse one with the other. They are two different instruments with their own advantages and disadvantages. Let us see what they are and which one would be more appropriate.

What is a Pension?

It is a type of retirement account which is mandatory for Government employees but is also recommended for private-sector employees to secure their retired life. The fund is opened and maintained with regular contributions throughout employment.

Some companies offer pension to their employees as part of the job (Employees’ Provident Fund or EPF) while others can voluntarily opt for other pension schemes (PPF/ NPS). In the case of private sector employees, the employer manages the contributions and payouts, which is one less worry on your end. Even if the company suddenly goes bankrupt, the Pension Benefit Guaranty Corporation will try and get you your pension as much as they can. You may not get the entire amount but you will still have most of it.

An important feature of pension is the tax exemptions as you receive the payments on your retirement under Section 80C (PPF, EPF, NPS, etc).

As far as maturity is concerned, you generally have two options.

  1. You can receive monthly payments which give a regular source of retirement income.
  2. You can choose to get your pension as a lump-sum amount. This way you can get the entire amount at once and use it as you like.

At the time of your retirement, you receive payouts regularly or in a lump sum, depending on the scheme that you opt for. The amount you receive depends on several factors like your age, salary and the duration of your employment.

What is an Annuity?

It is similar to an insurance scheme. You make a deal for a stipulated amount of money and pay the money at one shot or through deposits regularly. Your money is invested in mutual funds, stocks or bonds. The specifics like the amount you receive, maturity, etc. are set by you. When the time comes, if you retire or not, you start to receive your payments from the annuity.

A big advantage of annuities is that if you use your income-after-taxes to fund the annuity, then your pay-outs are totally tax-free. Suppose you exhaust your pension completely, you can open an annuity that lasts till your death.

Conclusion

On the whole, a pension needs very little planning on your part because it is likely to make most of the payouts as the law protects pension payments. Whereas with an annuity you receive a fixed stream of payments by buying it with some or all of your pension ‘pot’.

When it comes to deciding which of the two is ideal for you, it is best to look at your lifestyle, planned retirement corpus, spending capacity, etc. It will help you understand which one is more beneficial for your retirement as per your requirement and circumstances.

retirement

How to plan your Retirement

“Old age is like everything else. To make a success of it, you’ve got to start young.”

-Theodore Roosevelt

In India, the most common beverage consumed is a cup of hot tea. It is served in the house, every morning, evening and sometimes even at night. A cup of hot tea is comforting and each person has their own way of making tea depending on their tastes. Such is the case of saving money. Many people do it in a different way. Now one of the most mundane of all saving is that of retirement. When approached with the subject people wave it off saying they’ll probably never retire or they will be well taken care of by their dependents. But like they say, your parents are not your emergency fund and your children are not your retirement fund. That’s why planning for your savings is crucial for maintaining your lifestyle even after you retire at that time.

So how does a person begin to plan for retirement? Well, there are two important points to keep in mind:

Your Spending

Every person’s individual spending habits vary. Some spend on food while others spend on clothes, some spend on their trips to exotic places while others spend on furnishing their dream home. One of the most important things to remember is that what you spend now will only increase in the years to come thanks to the constant inflation. So, in order to plan for what you spend after you retire to take a hard look at how much you spend these days. Try and anticipate how it will grow over the years while taking into consideration the inflation in the market. An easy way to do this is using the Rule of 72 which states that if you want to know how long it will take to double your money at 6% interest(inflation), divide 72 by 6 and get 8 years. Knowing this will instantly give a clear picture on what you need to do rather than leaving it up to chance to figure it out.

Your Saving

Now it comes down to how much a person must save. Many already have savings like FDs and Provident Funds so it can vary in terms of that. But when it comes to stocking up for your retirement there is a formula that will work wonders for you. Based on the age you are you save up that percentage of your income (after taxes). If you are 25 you should put away 25% of your income, if you are 30 you must put away 30% of your earnings. This should begin as early as you start to earn right until you are 55 or 60 years old.

Say you are 65 when you finally give yourself a break and want to sit back and take the load off. You will have children who take care of you and dependants that are always with you. Would it be better to still be standing on your own and do whatever you want rather than be totally dependant on others? You can use the money to pay your bills, go on that trip you planned for, buy your dream house, even pay for your dependent’s emergency needs at times.

Retirement isn’t just another option, it’s a need. So don’t delay, choose a way to save up for your retirement. The money you save today is like a bag of tea that is stored up until the right time. When you finally retire you can have a hot cup of strong tea. However, if you don’t plan for it and save up, you will have only a weak tea that gives no energy or comfort whatsoever.