How to Plan For Your Retired Life in India?
Are you ready to play the second innings of your life? Due to the rich tradition of respect and care of the elderly in India, there is little need for retirement planning.
It is generally believed that the extended family will take care of financial responsibility for the older generation.
Are you ready to play the second innings of your life?
Now in addition to globalization i.e. new opportunities around the world and joint family system, suddenly old Indians have become more responsible for their retirement safety.
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The main criteria for keeping in mind while planning the twilight phase of someone’s life is safety and returns, liquidity, capital protection and low risk. There is a need to plan for every need and contingency.
Liquidity considers great importance. Due to lack of salary or business income, the portfolio should be designed in such a way that it provides a pillow for regular expenses.
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Bank savings accounts offer a small interest of 3.5%, but they provide great liquidity, because any time money can be withdrawn.
Medical expenditure usually increases the retirement life which can be covered adequately by taking a mediclaim policy.
For the increase in the limit of exemption on medical insurance premium for senior citizen, apart from this, there is a need to provide for a medical emergency.
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For people with extra space, rental income is another good fixed income because standard deduction of 30% is allowed.
If the lease of a company is lodged with respect to residential property, then the possibility of getting vacant on expiry is intensified.
The concept of ‘reverse mortgages’ provides a monthly income stream to senior citizens who earn interest on loans received by pledging their home by taking ownership and occupation during their lifetime.
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Apart from regular income, anyone needs to plan for long-term needs such as travel, gifts for grand children, improvements in the house or just making daily life more comfortable.
Bank fixed deposits, bonds, equity and mutual funds are good options for investing. But equity is a high risk investment; the portfolio should capture a small proportion.
Equity oriented and monthly income schemes of mutual funds are safe to play. It should be ensured that proper enrollments have been made in all the investments.
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It is also the right time to think about the preparation of will to facilitate the succession plan. This will help to avoid controversies and facilitate tax matters for successors. To avoid problems later, we should be registered.
Senior citizens should plan their investments and taxes keeping in mind the prescribed provisions in the budget.
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It has been envisaged that the total income of senior citizens from all sources excluding short-term capital gains is Rs. Up to 2,00,000 will be tax free. Beyond this, the following rates will apply:
Income slab INR 2,00,000 to 2,50,000 – tax rate 5%
Income slab INR 2,50,001 to 5,00,000 – tax rate 10%
Income slab INR 5,00,000 to 10,00,000 – tax rate 20%
Income slab INR 10,00,000 and above – tax rate 30%
The following two schemes provide regular risk free income to retirees by the government:
Senior Citizen Savings Scheme:
This is for people over 60 years old. Those over 55 years are also allowed to invest in certain conditions.
Minimum investment amount Rs. 1000, while the maximum limit is Rs. 15,00,000 The tenure of this scheme is 5 years and it is 9% p.a. Payable quarterly Encashment is allowed from time to time after one year from the date of deposit.
Post Office Monthly Income Plan:
This plan provides for monthly payments of interest income on a long-term basis. The account can be opened in any post office in India.
Minimum investment amount Rs. 1000 and upper limit respectively for single and joint accounts. 3,00,000 and Rs. 6,00,000. The investment period is 6 years and 8% pa is of interest. Interest is taxable.
Finally, retirement means not to take a walk in the morning or to lie on the arm chair and read the newspapers.
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Retirement means to keep oneself in activities that can earn, pass time and get rid of all physical and emotional worries. By pursuing the hobby of any one or by having a part time job or by setting up a small business, you can spend time.
Experiences that have been collected by retired people through their lives, there may be a lot of value for organizations and you.