Some of the key reasons to plan one’s retirement in today’s day and age include:
- Concept of Joint Families being replaced by Nuclear Families.
- Escalating prices of goods and services.
- Children travelling abroad or living in different cities for better job opportunities.
- Higher cost of medical treatment and increased life expectancy of individuals
Keeping all these factors in mind, one has to choose and plan for retirement in a very systematic manner. Apart from saving enough for your retirement you also need to invest those savings wisely to reap maximum benefits. For the longest time, traditional investments like PPF, EPF, Bank tax-saver FDs, NSC and Life Insurance policies have been considered ideal for retirement planning as they are risk-free in nature. One important aspect which people do not realise while making investments blindly in these schemes year on year is whether the returns offered are more than the prevailing rate of inflation. One must understand that retirement planning is a long-term investment and this ideally involves investments which have the potential of higher returns in the long term. While there are many options which one can look at for long-term retirement purpose, the general mindset is to look for investments which also provide tax benefits and hence PPF and Bank FDs are preferred as they are backed by the government so completely safe. However, under Sec 80C there is another such instrument which is equally tax-efficient and can potentially give much higher returns at the time of retirement. These are Equity Linked Savings Scheme, popularly known as ELSS.