May 2023
4 mins read

7 Things Your Retirement Plan Should Do

The average Indian’s life expectancy has increased from 59.6 years in 1990 to 70.8 years in 20191. While that’s good news, it also means that our post-retirement expenses go up the longer we live. A retirement pension plan could help you manage these growing post-retirement expenses. But with hundreds of different plans to choose from, how will you pick the best? 
Here are seven things your retirement plan should be able to do:

Manage post-retirement expenses

On average, Indians need 64% of their pre-retirement income to live a comfortable life after retirement2. Therefore, a good portion of the basic post-retirement expenses should be covered by your pension plan, if not the entire amount.

point 1

Beat inflation

Inflation will significantly increase the cost of living as you age. Thus, it is essential for your retirement plan to generate positive inflation-adjusted returns. The investment value should consistently rise along with the rising costs of everyday necessities.

point 2

Take care of financial emergencies

Unexpected financial emergencies relating to family, health, investments, housing etc. can consume a significant portion of your retirement savings. Therefore, your pension plan should always keep you prepared for such contingencies and protect your savings. 

point 3

Save taxes

Apart from the standard Section 80C deduction of Rs. 1.5 lakh in a financial year, there are various types of retirement plans that offer additional tax savings. For instance, the principal amount you invest in an immediate annuity plan is tax-exempt. Before choosing a pension plan, ensure that you thoroughly understand its tax implications in order to maximise your savings.

point 4


Many retirement plans also allow investors to determine the asset allocation of the fund or plan into which they are investing. This is an excellent way to diversify your investments, depending on your risk appetite and objectives.

point 5

Financial security for dependents

Some pension plans have additional benefits like death cover – in the event of your unfortunate demise, your spouse or other family members receive a lump sum amount from the policy provider. Such plans can help secure the financial future of your loved ones.

point 6

Meet retirement goals

Whether it’s travelling, pursuing a hobby, fulfilling your entrepreneurial ambitions, or living a quiet life away from the city, your pension plan should take you closer to your retirement objectives and help you live a fulfilling retired life.

point 7

Ultimately, the best annuity plan is one that most effectively meets your requirements and expectations. Before investing, ensure that you thoroughly understand the product and its advantages – checking its capabilities against the factors listed above is a good way to start. 
1. https://www.thehindu.com/news/national/india-gained-decade-of-life-expectancy-since-1990-says-lancet-study/article32869093.ece
2. https://data.oecd.org/pension/net-pension-replacement-rates.htm

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