Types of Investment Plans for Retirement Planning | MetLife Bangladesh
Types of Investment Plans for Retirement Planning
Many people look forward to retirement. It’s a time in their lives when they move from working life to relaxing and spending time with family. They may even look forward to doing the things they never had time for.
However, for some people, the thought of retirement can be quite stressful. This is because they haven’t adequately prepared for the financial implications of no longer receiving a salary. To ensure that you are financially stable when you retire, it’s always recommended to consider retirement investment plans as early as possible.
Understanding Retirement Planning
What is Retirement Planning?
Simply put, retirement planning refers to the process of preparing early in your life or career for the time when you retire. This type of planning can involve various savings and investment policies.
Importance of Retirement Planning
Many people underestimate the importance of retirement planning. It’s crucial to keep in mind that factors such as the cost of living and inflation would have rapidly increased by the time you retire. That means it may be difficult to sustain the type of lifestyle that you may be accustomed to. Furthermore, there’s also the possibility of health-related issues to budget for.
Understanding Investment Plans
What is Investment Plan?
What is an investment plan? An investment plan allows you to manage your money more wisely. Investment plans differ from saving plans in that they can generate a higher return, adding more money to your retirement financial portfolio.
Importance of Investment Plans
The key importance of investment is that smart investing allows your money to outpace inflation which in turn increases value. Compounding increases the growth potential. Essentially, investing money in credible investment plans will ensure that you have sufficient money available to sustain your retirement period. Investment plans are an essential way to achieve future income goals.
Types of Investment Plans for Retirement
Pension Plans
Pension plans work by acting as a regular source of income during retirement by enabling periodic payouts. This type of investment plan enables the policyholder to withdraw a portion of the amount at the time of retirement. The remaining monies are then dispatched as a regular monthly income.
National Pension Scheme (NPS)
The National Pension Scheme (NPS) is primarily a government-sponsored pension scheme. This retirement plan enables the individual to set aside a specific sum of money in a pension account during their working life. Since the monies are invested, the initial amount grows over the years. Upon retirement, a lump sum can be withdrawn, while the rest is released in smaller amounts every month.
Health Insurance
It’s no secret that our health deteriorates as we age, making the need for a comprehensive healthcare plan essential. Since medical costs can be quite expensive, the only way to counter this is by opting for health insurance. Opt for a healthcare plan that covers a range of potential conditions as well as offers options to add additional riders such as the critical illness rider for illnesses such as cancer.
Public Provident Fund (PPF)
While in many instances a Public Provident Fund (PPF) isn’t declared as a pension scheme, it’s essential to keep in mind that it serves all the required purposes of a credible plan. As a government-backed scheme, the PPF provides a sovereign guarantee for your money. It works by you investing money annually which in turn grows at a credible rate.
Investment in Mutual Funds and Equity
Mutual funds involve investing money from a group of investors into options such as stocks and bonds.
Deferred Annuity Retirement Plan
With this type of investment, policyholders will pay pre-determined premiums every month, ultimately creating a financial corpus. The money is then released once you reach the specific age agreed upon in the original agreement.
Immediate Annuity Plan
Essentially, an immediate annuity plan is perfect for newly retired individuals who have received a lump sum such as gratuity and leave encashment. The retired individual can then use the lump sum to invest in an immediate annuity plan. This money will then grow while at the same time providing a regular monthly pension.
Benefits of Investment Plans
Financial Backup for Emergencies
One of the top benefits of investment plans is that the policyholder will have financial funds available for unexpected emergencies. This can include sudden home repairs or even healthcare costs.
Returns on Investment
The right investment opportunities will provide you with excellent returns and compounding benefits. This in turn will assist you with wealth creation.
Tax Benefits
Many policyholders also get to enjoy and appreciate the various tax benefits that the Bangladeshi law offer on investment premiums. As per The Income-Tax Ordinance, 1984 you can get up to 15% tax rebate if you have an investment policy. It is advised to talk to a tax lawyer before submitting your final tax return.
Cost Savings
Investment plans can be more cost-effective than regular savings plans. This is because there is a higher return rate for credible investment plans.
Peace of Mind/Financial Independence
Healthy investment habits will provide you with peace of mind that you have monies in a fund for your retirement or long-term goals. Having a strong financial corpus also provides financial independence.
Inflation
There’s no real way to predict the factors that will influence inflation in the coming years. That means you won’t know how your savings can be affected in the future. Investments with compounding make it considerably easier to pace inflation rates, ensuring that your financial corpus grows and doesn’t decline.
Source of Income for Employees with no Pension
Opting for one of the various types of investment plans ensures that individuals without pensions have a steady source of income.
Early Retirement Option
Having a lucrative investment plan in place ensures that you can consider early retirement if your circumstances dictate it.
Protection of Assets and Property
Another benefit of investment plans is that these policies can take the form of assets and property. This can often be less risky than investing cash into a fund.
Start Your Retirement Planning at MetLife Bangladesh
The good news is that MetLife Bangladesh has retirement and investment plans that can serve people belonging to different income group. Hence, you can start your personalized retirement planning at an early age.
Assessing Income Goals and Future Goals
When you start working on your retirement planning, the first step is to assess the amount of money needed to secure your future goals. At MetLife Bangladesh pension amount is calculated as a percentage of the principal amount under LifeLine plan which is a retirement pension insurance policy. Mentioned percentage is called as “Coupon Rate”. This coupon rate is guaranteed to be not less than 2% of Principal Amount annually.
Build a Complete Actionable Retirement Plan
The MetLife consultants will provide you with a guide to investing to create a workable investment portfolio. Doing this will provide you with the peace of mind that financial security provides.
Reduce Expenditures
Part of creating a debt-free life during your retirement period involves reducing expenses. Pay off debts, refrain from creating new debt and save money to place into your investment plan.
Learn About the Benefits of Social Security, Various Investments and Healthcare
When you’re considering the various investment options, consider the benefits of each.
Benefits of Social Security
- Provides a source of income when you retire.
- Can provide beneficiaries with financial aid when the insured dies
Benefits of Investments
- Assists with wealth creation
- Can build a nest egg for retirement
- Tax benefits
Benefits of Healthcare Options
- Access to a network of doctors in your area
- Hospitalisation costs covered
- Additional riders provide access to critical care for a variety of illnesses
MetLife LifeLine Policy
The top retirement plan from MetLife to consider is the LifeLine. LifeLine is a retirement pension insurance policy built to ensure your retired life is as comfortable as you are now. LifeLine provides you a regular income for all your living and medical expenses. You will pay premium for a certain period of time when you are working and earning to receive pension income from MetLife for a long period of time after you retire.
Significant benefits include:
- Death Benefits
- Valuable Optional Riders
- Personal Accidental Coverage (if chosen)
- Income Tax Savings on Paid Premium
- Maturity Benefit
Frequently Asked Questions (FAQ)
Why should I plan for retirement from a young age?
There are several good reasons to plan for retirement early on in your life. The top reasons include:
- Life is uncertain.
- Wealth is built over time.
- For young people, age allows higher risk tolerance.
Which retirement plan is right for me?
Speak to a broker or financial agent to discuss the options that match your current and potential future needs.
How to choose retirement investments?
Consider the following pointers to choose the best retirement investment options:
- Assess how much you will need.
- Calculate what you will be able to contribute.
- Speak to a financial broker or advisor to assist with relevant retirement investment options.