Portfolio
Retirement Income Plans
These plans ensure Canadians maintain stable income streams during retirement:
RRIF (Registered Retirement Income Fund):
Converts RRSP savings into taxable retirement income. Mandatory annual
withdrawals apply.
Annuities
Provides guaranteed income for life or a fixed term, helping protect against
outliving savings.
CPP (Canada Pension Plan):
Government benefit available from age 60 to 70, with flexible timing to maximize
income.
OAS (Old Age Security)
Federal monthly benefit for seniors over 65, subject to income testing.
What risks does your policy cover?
It depends where you live, but standard homeowners insurance
policies will typically help pay to repair damage caused by
certain risks, or perils, including:
Home
Vehicles
Life
Business
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Retirement Pension Plans
What are retirement pension plans?
Retirement Plans are a category of life/annuity plans that are specially designed to meet your post-retirement needs such as medical and living expenses. You would want to maintain the same lifestyle post retirement. There could be an increase in your day-to-day expenses due to an increase in inflation. You would also have post-retirement dreams such as travelling the world, pursuing a hobby, starting a new venture, and more. By planning in advance, you can be financially prepared for your retirement.
This is where pension plans/retirement plans come in. Both pension plans and retirement plans are a category of life insurance plans that are specially designed to meet your post-retirement needs. To ensure that you can enjoy your golden years with financial independence, these plans help cover your expenses and secure your future.
Why do I need to plan for my retirement?
Increasing retirement years
With average life expectancy increasing in India, it has become increasingly important to plan for a longer retirement. The life expectancy figures indicate how long an average individual lives. In India, the average life expectancy of a person aged 60 is 18.02.
years. This means that an average Indian lives up to the age of 78. Hence, you need to start planning in advance to maintain your lifestyle and take care of other expenses for such a long duration.
Medical expenses
A major worry with increasing age is unforeseen medical expenses. Rising medical costs can be difficult to manage unless you plan for them in advance.
Financial independence post retirement
You would like to live your life on your own terms after your retirement. However, more than 65% individuals above the age of 60 depend on others for their daily expenses. This shows how important it is to plan for your retirement and ensure your financial independence.
How much do I need to save for retirement?
When you retire, your regular income stops. However, even during retirement, you would want to maintain your existing lifestyle and be able to support your family. In addition, there could be increased medical expenses. Hence, it is important to calculate your financial requirements for retirement so that you can be prepared well in advance. It is difficult to determine the exact amount you will require post-retirement, however, below are a few factors that you can consider to arrive at the amount:
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Your day to day expense – This will give you an understanding of how much amount you would need to maintain your current lifestyle even post retirement
Events and milestones during retirement – There could be financial responsibilities even during retirement, such as paying for children’s higher education or wedding, and more. It is important to include these costs while planning for retirement
Your post-retirement dreams – You may have dreams that you would want to fulfil post retirement, such as traveling, starting your own venture, and more. These would require a significant amount and hence, it is necessary to include these while calculating the amount you would need during your retirement
Unforeseen costs – While planning for retirement, you should keep some amount aside for any uncertainty, such as medical expenses, or any financial emergency
Inflation – This leads to an increase in the costs of goods and services, which requires you to pay an additional amount to consume the same goods and services at a later period. For example, if your current expenses amount to ₹ 6 lakh annually at the age of 45, to maintain the same lifestyle post retirement, you would require $2000* annually at the age of 60 assuming 6% inflation year-on-year. Hence, while calculating the amount you would need for your retirement, it is important to factor in inflation as well
How to calculate the amount I need to save for Retirement?
Here is a simple way to calculate how much you need to save for retirement:
Step-1: Calculate your annual expenses.
Step-2: Calculate the future value of your expenses: If your spending habits will remain the same then your expenses will grow on the account of inflation alone. Using an average annual inflation rate in India, you can calculate your future expenses.
Step-3: Present value of the corpus: You can calculate the expenses you would incur post your retirement using the average life expectancy of India. The total expense you would incur during your retired life would be the corpus needed before you retire. Next step is to find out the present value of the corpus.
Step-4: Amount you should save: Based on this present value, you can find out how much you should invest every month to build that corpus as per your expected rate of return
Step-2: Calculate the future value of your expenses: If your spending habits will remain the same then your expenses will grow on the account of inflation alone. Using an average annual inflation rate in India, you can calculate your future expenses.
Step-3: Present value of the corpus: You can calculate the expenses you would incur post your retirement using the average life expectancy of India. The total expense you would incur during your retired life would be the corpus needed before you retire. Next step is to find out the present value of the corpus.
Step-4: Amount you should save: Based on this present value, you can find out how much you should invest every month to build that corpus as per your expected rate of return
Power of Compounding
If you start saving early, your money will get more time to grow. For example, if you start investing $1000* p.a. at the age of 45, your retirement savings will be $4000* at a rate of 8% or $3000* at a rate of 4%, by the time you are 60 years. However, if you had started saving the same amount from the age of 40, your retirement savings at 60 would be ₹ 74 lakh at 8% interest rate and ₹ 46 lakh at 4% interest rate.
Increasing Inflation
After retirement, you will need regular income to meet your expenses. The later you start saving for your retirement, the more you will need to save. For example, if your monthly expenses are $ 300* at the age of 30, then by the age of 60, they will be $2.66 lakh## due to inflation. To meet these expenses, your retirement savings will need a monthly contribution of $ 2700. However, if you delay your savings by just five years, this amount will increase to $ 500* per month.
How do pension plans work?
Upon retiring, your regular income flow dries up and meeting day to day expenses can become a problem. A pension plan ensures that your income flow continues well beyond your retirement. Pension plans let you accumulate a corpus of funds through a lump sum investment or premiums that you pay over a period of time. Upon retirement, you receive regular payments from your corpus to ensure that the expenses can be met and your future is secure.
What are the steps to buy a Retirement Plan?
Below are the key steps to buy a retirement plan:
Define your goals:
You want to stay financially independent even during your retirement. You want to continue your current lifestyle, meet medical expenses and meet your post-retirement goals such as buying a house, traveling, pursuing a hobby, starting a new venture, and more. Defining the goals that you want to meet during your retirement can help you plan accordingly
Calculate the amount you will need:
Basis the goals you want to meet during your retirement, you need to calculate the amount that you will need to meet your goals. It is important to factor in inflation in this calculation. Knowing the amount that you will need will help you calculate the amount that you need to invest today to meet your retirement goals
Choose your retirement plan:
Look for a plan that can provide you with fixed income during your retirement. The income should be able to ensure that you achieve your post-retirement goals comfortably. In addition, check if your retirement plan offers you features such as flexibility to invest monthly, half-yearly, yearly or all at once, as per your convenience. You may also want features such as return of purchase price at maturity, cover that includes your spouse, and more. Choose a plan that meets your requirements
Purchase:
This can be done online or offline. You will need to submit relevant documents like identity and address proof, income proof, and others. Also, basis your retirement plan, you will need to pay your premiums monthly, half-yearly, yearly or all at once
How do I choose a pension plan?
It is important to have enough money to ensure your financial freedom during your golden years. Basis your post-retirement dreams and goals, you may require the money either in the form of a lump sum, a regular income, or both. Understanding the below factors will help you choose the right pension plan that will best suit your requirements.
Returns from the plan
It is ideal to look for plans which offer higher returns. A plan that you invest in, should provide high returns and be able to cover your post-retirement needs
Guaranteed pension
Risk appetite decreases with age. For your retirement, you may want to invest in a plan that provides guaranteed returns, free from market fluctuations. This will help ensure that your post-retirement goals are fulfilled, no matter what. Some plans offer guaranteed pension not just to the policyholder but also to the spouse in the event of an unfortunate event. Such plans ensure financial independence for you and your loved ones
Flexibility
As you move closer to your retirement, you may want to do more than what you planned at the time of purchasing the pension plan. This may require you to increase your investment towards the plan. Look for a plan that gives you the option to increase your premium contribution through top-ups. Also, look for features such as flexibility in paying premiums (monthly, half-yearly, yearly), multiple payout options, and more
Bonus and other benefits
Most retirement plans offer bonuses and benefits for staying invested. These bonuses and benefits that you get over the years will add to the returns from the plan and provide you with a larger retirement fund. Hence, it can be beneficial to go for a plan that provides you with these benefits
Why should you buy your retirement plan from Canada life?
Below are some key benefits of buying a retirement plan from Canada Life:
Multiple options:
Canada offers a variety of retirement plans to choose from for every individual, irrespective of age, income or goals
Guaranteed $$ income:
Canada Life offers you retirement plans that provide guaranteed
Simplified purchase process:
You can purchase a retirement plan from the convenience of your home or office in just a few steps. The features and benefits of all plans are available online. You can compare multiple plans, check the premium, and make an unbiased decision
