Retirement Planning

It refers to the allocation of finances for retirement. The goal of retirement planning is to have a financial independence, so that employment after retirement is optional rather than a necessity. The aim of retirement planning is,

• Assess readiness-to-retire given a desired retirement age and lifestyle, i.e. whether one has enough money to retire; and
• Identify actions to improve readiness-to-retire.
• Acquire financial planning knowledge
• Encourage saving practices

Purpose

It can be started at any age. The earlier start an individual has in planning his/her retirement planning, the better chances there are of an efficient retirement back-up. Planning for retirement helps an individual in the following ways.

• It is the tax favored way of setting aside money during the working years for retirement.
• It reduces taxable income in the years that the individual has contributed.
• It provides an estimate of the income during the retirement years.

New Pension Scheme

New Pension Scheme (NPS) is a pension scheme launched by Govt. of India on 1st April, 2009 and is a defined contribution based pension scheme. It differs from the existing pension scheme in a sense that NPS has a defined contribution structure where an individual can decide where his contributed money will be invested.

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