Financial Planretirement plan

How to Choose the Best Retirement Plan

Retirement is known as the golden period of one’s life. It is during this time that you are relieved of your workload and obligations. This time may be spent to do things you always wanted to do but were not able to due to prior commitments in life.

It is, however, important to remember that this is the time when your regular income stops. It may become quite difficult to manage financial obligations without a source of income. For this purpose, financial advisors recommend individuals to invest in a retirement scheme.

There are retirement plans in the market that come with a host of benefits. Plan features and benefits, however, vary from company to company. Hence, it is imperative to carefully analyze numerous aspects so as to choose the best plan. Following are five tips to help you make the right choice.

  1. Decide how much you will need post retirement

While planning for your retirement, the first and most important aspect to consider is the amount you will need to meet your expenses once you retire. Make sure to carefully estimate this amount to help in retirement planning. Also, ensure that the amount you need is adjusted for inflation.

  1. Research plan options

With a wide range of options available in the market, you may compare schemes and select the best retirement plan based on your needs. Analyze the features and benefits offered by each plan. You may either choose from among numerous types of pension plans, such as deferred annuity, immediate annuity, annuity certain, life annuity, guaranteed period annuity, and pension plans with or without life cover.

  1. Choose a plan that offers diversification

Instead of investing in a single asset, you may choose a plan that provides a high degree of diversification. Consider a plan that diversifies your investment corpus in both debt and equity, so as to balance out risks involved in each. Diversification protects you from market fluctuations while helping you get the best return simultaneously.

  1. Choose a plan that offers early/late vesting age based on your need

Vesting period refers to the period where you begin to receive a pension. You may opt for a retirement scheme with a vesting age that suits your needs. In case you wish to receive an income stream early on in life, invest in a plan that has an early vesting period, and vice versa.

  1. Consider charges and expenses

Every retirement plan comes with numerous charges such as administration fee, mortality fee, insurance-related charges, and investment advisor fee, besides others. Opt for a plan that offers the most competitive charges to save more.

Keep the aforementioned tips in mind while comparing different pension schemes. Doing so not only helps you meet your investment needs but also ensures a financially secure life for you and your family later on in life.

Vikas Agarwal
the authorVikas Agarwal
Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of - an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.

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