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Need of Pension Planning at an Early Age

In the hustle and bustle of daily life, especially in a country like India where the focus often remains on immediate financial needs, pension planning tends to take a backseat for many individuals. However, the importance of pension planning cannot be ignored. Let’s dive into why pension planning in early age is important in the India.


1. Increasing Life Expectancy: India has witnessed a significant increase in life expectancy over the years, thanks to advancements in healthcare and a better standard of living. While this is undoubtedly a positive trend, it also means that individuals are likely to spend more years in retirement. Therefore, it becomes crucial to have adequate financial resources to sustain oneself during these years, making pension planning indispensable.


2. Inadequacy of Government Pension Schemes: While the government does offer pension schemes like the Employees' Provident Fund (EPF) and the National Pension System (NPS), the benefits may not always suffice to maintain the desired standard of living post-retirement. Relying solely on these schemes without supplementing them with personal guaranteed pension planning could lead to financial strain during retirement.


3. Rising Cost of Living: Inflation is a reality that cannot be ignored, and it has a direct impact on the cost of living. What may seem like a comfortable amount for retirement today may not be sufficient several years down the line due to the eroding effect of inflation. By starting pension planning early, individuals can account for inflation and ensure that they have enough savings to maintain their lifestyle post-retirement.


4. Tax Benefits: Pension planning in India offers various tax benefits under Section 80C and Section 80CCD of the Income Tax Act. By investing in pension schemes like LIC's Annuity Plans early, individuals can not only secure their future but also avail of tax deductions, thus optimizing their tax liabilities.


5. Financial Independence: Retirement should ideally be a phase of life where individuals can enjoy financial independence and pursue their interests without worrying about money matters. However, achieving this level of financial freedom requires careful planning and disciplined saving from an early age. Pension planning lays the foundation for financial independence during retirement, allowing individuals to lead a fulfilling life post-career.


6. Uncertain Future of Social Security: While social security schemes exist, their sustainability in the long run is often a subject of debate. With demographic changes and economic uncertainties, the future of social security remains uncertain. Therefore, relying solely on government pensions may not be prudent. Personal pension planning provides a safety net, ensuring financial security irrespective of the future of social security schemes.


How can I plan my Pension from an early age?


Investing in Guaranteed Pension Schemes like LIC' Jeevan Akshay, Jeevan Shanti and Jeevan Dhara, provides a robust support to your pension planning.

Along with these Investing in Nifty 50 Index funds for a longer duration gives you liquidity as well as help an individual create a huge corpus which can be later on used as Systematic Withdrawl Plan.

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