What is a 15 Year Retirement Plan?
A 15 year retirement plan is a long-term financial plan that helps you build a corpus for retirement . You save money for 15 years, and at the end of this period, you receive the money back in regular payouts or as a lump sum, depending on the plan.
There are different types of retirement plans available. Some give fixed returns, while others are linked to the market. You can choose the type based on your comfort with risk and your financial goals. Using a retirement calculator can help you see how much money you need to save now for a better future.
How Does a 15 Year Retirement Plan Work?
Here's how a 15year retirement plan typically works.
You select a plan and invest as per the chosen frequency. The investment grows over time, depending on how much money is invested.
After completing 15 years of investment in retirement plans, you receive payouts. In some plans, you may receive the full amount as lump sum, while in others, you receive regular income. It depends on the plan and the particular payout method you choose.
Top Reasons to Consider for a 15 Year Retirement Plan
People usually choose a retirement plan for the following reasons:
Strategic Financial Planning
It helps you save for the future in a step-by-step manner. You make regular payments and grow your savings steadily.
Assured Returns
Some retirement plans, like PPF, offer fixed or guaranteed returns. This means you have an idea of the fixed payout you will get after 15 years.
Flexible Investment Options
In market-linked retirement plans, you can choose how your money is invested. If you prefer lower risk, you can choose safer options like debt funds. If you're open to higher risk for potentially better returns, you can opt for market-linked options such as equity funds.
Tax Advantages
The money you invest in a retirement plan can qualify for a tax deduction of up to ₹1.5 lakh per year under Section 80C of the Income Tax Act (if you choose the old tax regime). Some plans also offer additional tax benefits under Section 80CCD(1B) of up to ₹50,000.
The maturity amount or pension you receive may also have tax benefits, depending on the type of plan and the income tax laws applicable at the time of withdrawal. The tax benefits applicable depend upon the type of plan and the Income tax laws.
Key Factors to Evaluate Before Choosing a 15 Year Retirement Plan
Here are some points to check before buying a retirement plan:
Assessing Your Retirement Timeline
Consider your target retirement age and work backwards. If your target retirement age is 60, getting 15 year retirement plan starting at age 45 will get you that plan just in time when you stop working.
Aligning with Future Financial Goals
What do you plan to do after retirement? Do you want to travel, start a small business, or just relax at home? Make a list and then decide how much money you need. This will help you pick the right retirement plan.
Reviewing Your Existing Assets
Check what you already own. It could be a house, savings, or other life insurance plans. If you have some savings already, you may not need a very large retirement plan. But if you are just starting, a good retirement plan can help you reach your goals.
Knowing Your Risk Tolerance
Are you okay with taking a little risk in hopes of getting better returns? Or do you want your money to be safe even if the returns are low? Based on this, you can choose between fixed return and market-linked based retirement plans.
Conclusion
A retirement plan is a simple and useful way to plan your future. It helps you save money over time, enjoy tax benefits, and some plans also provide financial protection your family with life insurance coverage. Before making a choice, always check your retirement goals, income, and your comfort at risk.
Also, use a retirement calculator to see how much you need to save regularly. Understand the types of retirement plans available and choose one that best fits your needs. Whether you want steady returns or a chance to earn more from market-based investments, there’s a plan for everyone.
FAQs
What happens if I miss a few premium payments in my life insurance based retirement plans?
If you miss premium payments in a life insurance based retirement plan, the plan will not lapse immediately. Insurers provide a grace period, during which you can pay the premium and continue the policy.
Can NRIs (Non-Resident Indians) invest in a 15 year retirement plan in India?
NRIs can invest in most retirement plans in India, subject to FEMA guidelines and plan-specific rules.
Are there any penalties for premature withdrawals from a 15 year retirement plan?
There may be some penalties or reduced benefits for early withdrawals, depending on the terms and type of plan you have opted.
Can I add riders like critical illness benefit rider to my 15 year retirement plan?
Life Insurance based retirement plans like Unit Linked Insurance Plans (ULIPs) allow you to add riders at an additional nominal premium for extra coverage . Common riders include critical illness benefit rider, accidental death benefit rider, waiver of premium rider, etc. The availability of riders depend on the specific plan, so it’s best to check the rider options before purchasing.
