How to Plan for Father’s Retirement

Every father has a role to play. He acts a life blood of his family whether it is to support his wife and children, or his duty to look after his parents. He is involved in each sphere of his family’s needs and throughout his life he needs both growth and stability. Growth in terms of fulfilling his financially securing his family and professional needs. Stability in order to continue his life in an ordered manner by maintaining his family in a comfortable manner and as a family that is happy.

We never realize that a man spends one-third of his life as a child and the remaining two-thirds of his life as a father, playing a big role in his family, with big responsibilities that need to be tended to like the needs of his family which often become the main aim of a fatherly life.

Why does your father needs savings, investments and proper planning for his retirement? He requires all this because he is a father. Financial assessment throughout his life because his today’s earnings will fulfill his requirements at the time of retirement. Once you become a father, your role being a father never ends throughout your whole life. Your daily activities result in daily financial needs but at one point of time your income will stop because of age. But then have your ever thought of how will you play this role after retirement. Yes, as a father you need to analyze your retirement needs and for that you have to start thinking of it TODAY.

Public Provident Funds for Retirement

PPF is one of the favorite taxes savings option. The interest earned from PPF and the balance in PPF is exempt from income tax and wealth tax respectively. PPF also gives a good return on your investments where you can invest with a minimum amount of INR 500 per annum through installments, whichever suits your father’s. You can easily avail a loan in the third financial year and moreover you can also make partial withdrawals once every year from your PPF account after the expiry of 5 years within certain terms and conditions applied. Isn’t it that easy and good enough for you to save for your needs for your retirement, yes it is.

New Pension Scheme

This scheme as the name suggests is a new scheme which came into effect from 2004. It is one of the best steps which the government of India has taken by introducing NPS, as a defined contribution pension scheme.

Any Indian citizen or NRI, whose age is in between 18 and 55 and complies with KYC (Know Your Customer) norms can avail the NPS scheme. The minimum contribution is set at INR 6000 per year and the minimum number of contribution per year is 4. The NPS scheme is a voluntary scheme and every Indian citizen can open one. It is simple, it is flexible as you can choose your own investment option and pension funds and see your money grow. It is regulated by PERDA, with transparent investment norms and regular performance reviews of fund managers by NPS trust. Tax benefits are applicable as per the income tax act 1961, as amended from time to time.

Pension Plan from Mutual Funds and Insurance Companies

Another option for planning father’s retirement is the pension plans offered by life insurance companies and are bundled products, offering benefits of both insurance and investments. The first phase is accumulation phase, during which you pay premiums and the money accumulates through the tenure of the plan. The accumulated money is then invested in securities and approved by the IRDA, the insurance regulators. These products are designed to protect the value of your principal and at the same time provides with steady returns. The accumulation stage is followed by the vesting age (40 to 70 years). During the annuity phase you can withdraw 33% of the accumulated amount in one go and the rest is held as pension with maturity benefits which are based on sum assured, giving you guaranteed additions, if any, and bonuses. That is why this is an excellent option to think while planning for your father’s retirement. There are other ULIP plans like Capital Protection Plans (highest net asset value guaranteed plans). Moreover pension from mutual funds are also emerging area for investors to invest and generate good corpus after retirement. For example ELSS (Equity Linked Saving Scheme) gives good returns on your investments and moreover are considered as tax saving instruments under section 80C of the Income Tax Act 1961. Also read about safest investment with high ROI