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What Millennials Need To Know About Retirement Planning

With so many exciting things to plan and ponder over in one’s youth, it may be natural for retirement planning to take a backseat for millennials. Busy with building their careers and pursuing their passions, millennials may look at retirement as a distant phase they need not worry about.

Investment plans also act as tax-planning tools, as many avenues help reduce tax liability. There are different types of investment plans, and by choosing the right one, you can invest according to your needs and grow your savings.Read Less

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Written ByPalak Bagadia
AboutPalak Bagadia
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Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 7th July 2024
Modified on: 7th July 2024
Reading Time: 15 Mins
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However, it may be crucial to realise that retirement planning is not just for those nearing retirement but may also be important for those far away from it. The sooner one begins planning for their golden years, longer the duration one may have to build a more substantial retirement plan.

But despite understanding the importance of retirement planning, you may not know where to start. Fortunately, we are here to help you. Here’s a brief guide on what you should know about your retirement strategy.

 

What is Retirement Planning?

 

Retirement planning, whether for millennials or otherwise, may involve setting up financial goals and preparing for a period in life when one may not be working anymore. As there may no longer be a regular source of income (such as a salary), one may need to create financial strategies early on and plan for alternative income sources to support retirement.

Establishing these sources of income in the later years may be achieved by saving and investing correctly, where products such as annuity plans may be a suitable fit. Annuity plans are life insurance products with a retirement component. An Annuity plan is a financial product that provides you fixed amount of money in return for a lump sum investment. This may be suitable for you if you have financial dependents to look after as well.

You may buy an annuity and pay premiums for a fixed period. Then, once your retirement begins, you may start receiving pay-outs at the frequency of your choice. Out of the two types of annuity options available, deferred and immediate, millennials may find the former more suitable, as it is their earning phase. In a deferred annuity plan, the pay-outs may be paid out after a substantial amount of time. In an immediate plan, the pay-outs may start coming in within a short period of purchasing the plan.

If retirement may be distant for you yet, a deferred annuity plan may seem more feasible.

 

Benefits of Retirement Planning for Millennials

 

Now that you may have some idea about retirement planning and annuity plans, let’s look at what you should know about your retirement plan’s benefits.

 

• Longer Time one gets to Accumulate/Generate Wealth

 

One of the vital benefits of retirement planning for millennials may be the long period one gets to accumulate/generate wealth. Even with the low premiums, you may be able to secure a high-value retirement fund for yourself and your family, because of a longer timeframe in hand.

You may also want to consider investing in market-linked annuity plans if the risk relating to market fluctuations are acceptable for you.

 

• Supporting Dependents

 

As a young person, you may or may not have any dependents currently. However, as you form your own family, there might be a chance that the number of people depending on you financially may increase. With the right retirement planning, you may be able to create a secure financial life for yourself and your dependents.

 

Important Things You Should Know About Retirement Planning as a Millennial

 

Retirement planning for young adults may become easier if one has well-rounded knowledge about the same. With this context, here are a few more additional things you should know before you start your retirement planning strategy:

 

1. Define what your retirement life may look like –

 

Only when you have a clear vision of what you want your retirement life to look like, would you be able to make that vision into a reality. Understand the costs of your ideal retirement life, and then go ahead making it a reality.

 

2. Do not ignore the uncertainties –

 

Dealing with an unfortunate and untimely event may not be a part of your plan. But when the time comes to do so, prior preparation may come in handy. Hence, insurance coverage may be paramount.

 

3. Reassess your risk appetite –

 

As a millennial, you may have a long time before your retirement. As a result, you may want to consider reassessing your risk appetite at periodic intervals. This would help in accommodating and planning for the ever-changing external circumstances and making suitable investment decisions.

 

4. Take advantage of product features –

 

What you should know about your retirement plan is that it comes with different features to choose from, such as, premium payment options, payout options, joint life insurance coverage options (where your spouse may also be considered as the life insured) and so on. Consider your current and future finances and choose an option that may suit you the best.

 

Conclusion

 

When attempting to plan for retirement as a millennial, you may want to consult a financial advisor to understand what may work for you in the long run. Keep in mind that by starting retirement planning early, the benefits may become more substantial.

General reference links:

1. https://www.personalfn.com/dwl/Retirement-Planning/heres-a-robust-roadmap-to-retirement-planning-for-millennials

2. https://www.bajajallianzlife.com/retirement-pension-plans.html

BJAZ-WEB-EC-02657/23

Retirement Planning Guide

Long term investment plans - What Are Their Benefits?

A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.

Read More
Long term investment plans - What Are Their Benefits?

A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.

Read More
Long term investment plans - What Are Their Benefits?

A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.

Read More
Long term investment plans - What Are Their Benefits?

A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.

Read More
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~Individual Death Claim Settlement Ratio for FY 2023-2024

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

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Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116


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Nifty 500 Multicap Momentum Quality 50 Index Fund is available Bajaj Allianz Life Future Wealth Gain IV - A Unit- linked Non- Participating Individual Life Savings Insurance Plan (UIN:116L202V01), Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01), Bajaj Allianz Life LongLife Goal III is A Unit-linked Non-Participating Whole Life Insurance Plan (UIN:116L203V01), Bajaj Allianz Life Invest Protect Goal III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L205V01), Bajaj Allianz Life Magnum Fortune Plus III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L207V01), Bajaj Allianz Life Goal Based Saving III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN:116L206V01) and Bajaj Allianz Life Smart Wealth Goal V - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L201V01)

In addition to the already existing funds, Nifty 500 Multicap Momentum Quality 50 Index Fund is now available with the above mentioned products. Customer has an option to choose from other available funds apart from Nifty 500 Multicap Momentum Quality 50 Index Fund.

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I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any Call made, including via Voice over Internet Protocol & WhatsApp, SMS or WhatsApp messages, in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

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