There goes a very famous saying that ‘it is not about how much you make, but how much you keep of it and how much of it works for you.’ Today, many senior citizens are able to enjoy the same lifestyle what they did before retirement. They are financially independent as they have done proper planning for their golden years. But it may be difficult for some retired senior citizens to live the same lifestyle they had before they retired, mainly due to poor retirement planning.  

They may not be aware of the different investment options available that they can benefit them. For proper retirement planning you will need to invest in different products that offer long-term stability and high returns on investment 

Types of retirement plans 

Broadly speaking, there are two types of retirement plans. One is the savings plan, while the other is an annuity plan. 

• Under the savings plan, you need to invest funds regularly until your retirement age. And you will start getting returns post-retirement. These funds help you grow your funds for the retirement period.  
• While in the annuity plan, one can start investing and they can get a regular amount of money till retirement. This is in the hands of the investor to decide when he wants to start getting this regular income. The investor also has an option to decide whether he wants to receive payment on a monthly, quarterly, semi-annually, or annual basis. 

Various Retirement Investment Plans in India 

• National Pension Scheme

The NPS was initially launched exclusively for government employees and then opened to all Indian citizens. This is a government regulated and extremely low-cost pension scheme. This is the only scheme which provides unique tax benefits over and above Rs. 1.5 lakhs. The subscriber can have the option to design own portfolio or choose a fund manager. On retirement, you can withdraw a partial amount and use the remaining amount for a regular income on retirement by buying an annuity. 

• Public Provident Fund

This is also a tax-saving instrument. It’s also known as a savings-cumulative-tax savings investment vehicle since it allows you to create a retirement fund while lowering your annual taxes. The interest earned and the returns in this fund are not subject to tax. One can start this scheme even with a minimal amount of 500 INR. Any Indian citizen is allowed to have PPF but one citizen can only have one PPF account except the second account is a minor. Another point to be noted is that the tax exemption will be given till the amount of 1.5 Lakhs to be deposited in PPF. 

• Mutual funds

Mutual funds systematic investment plans can also be used for retirement planning. Mutual funds can help you earn higher returns than PPF or NPS. But mutual funds’ investments are subject to market risk. With the help of mutual funds, individuals can have exposure to different asset classes which help them in diversification and provide them with an option to invest in multiple asset classes as per their risk profile.  Mutual funds provide a diverse array of investment options to suit a variety of investment goals and risk appetites.  

• Direct Equity

If you are well versed with the financial markets, and already invest in the market, you can try out direct equity investment to accumulate a corpus for retirement. However, the risk under this method is quite high. It is advisable for only those individuals who already have exposure to financial markets and their risk appetite is also very high. One needs to consider that this is the most volatile market with no guarantee of return, though the high risk may lead to high returns creating a good amount of wealth for you.  

If your retirement funds are going to be your only source of income in future you need to make sure that your financial planning includes a plan for regular fixed income. You will also have to keep in mind that inflation is increasing every year and if not planned properly your expenses will go up while your income remains static.