TIPS: How to retire RICH

Ashish Vohra, Senior Director and Chief Distribution Officer with Max Life Insurance answered readers' queries on retirement planning.

Here are the unedited excerpts:

Deepa Bist: I am now 48 yrs and the present expenses is say 100,000 INR. What should be the retirement planning in terms of corpus so that nominal interest of Monthly Income Plan will meet the life style of today ??

Ashish Vohra: Assuming that you will retire at the age of 60 and average inflation at 8 per cent, you would require roughly Rs 2,35,000 to maintain your current lifestyle. To calculate the exact corpus at the time of retirement you may call a financial expert. You can also use an online calculator to give you approximate figures

Ankit Dave: My age is 26 and my salary is 40 k..how can i start for retirement plan? can u guide me?

Ashish Vohra: 1. Decide at what age you want to retire. 2. How much you require at the time of retirement - 100 per cent of your current household expenditure inflation. 3. Take the advice of financial advisor to calculate the corpus required at the age of retirement and the monthly savings you need to make to achieve that 4. Consider various options suggested by the advisor and choose what suits best for your need.

sreeni vasan: could traditional retirement plans beat inflation and give a good pension?

Ashish Vohra: The key to a healthy retirement corpus is time and discipline. Life Insurance Retirement plans on traditional platform also give good returns taking advantage of the compounding effect of money. However we would suggest you to consider the Unit Linked Platform and take an informed decision before buying.

rahul: What are the best retirement planning options for a male, 25, earning Rs 35,000 per month?

Ashish Vohra: There are various options available such as pension plans offered by life insurance companies, NPS, PPF etc. Life Insurance Pension Plans help inculcate disciplined savings for long-term need combined with life cover. Life Insurance plans offer some unique benefits such as spousal retirement benefit by Max LIfe Forever Young Pension Plan.

appa: Sir, is investing just in equity and MFs enough to earn a good kitty on retirement?

Ashish Vohra: It depends on your age, savings tenure and your risk appetite. However, it is always good to diversify your risks. In case age is on your side and you have long savings horizon, you may choose to have a portfolio skewed towards equity. For retirement planning you should consider Life Insurance pension plans.

dinesh: Sir, if I invest Rs 1000 each every month in equity, MFs, pension plan, ULIP, how much will I earn at the end of 30 years? I am 20 now.

Ashish Vohra: As you have long-term savings horizon and you are planning to start at a young age, you should consider investing in equity linked instruments initially. Closer to the vesting age, you may allocate your corpus into debt instruments to avoid any risk. Call a financial advisor for exact calculations.

rahim: My annual tax outgo is more tha Rs 3 lakh. How can I save on tax using retirement planning tools?

Ashish Vohra: Pension Plans offered by life insurance companies provide tax benefit under section 80C up to Rs 1 lakh. Other financial instruments such as PPF and NPS also fall under the same category.

mayank: I am not happy with my ULIPs. How can I remedy the situation?

Ashish Vohra: To give a specific response, the policy details will be required. However, I would like to mention that ULIPs are long-term savings and protection instruments. One should remain invested for the entire term to enjoy the full benefits of the product and short-term evaluation may lead to inappropriate decision. Please consult your life insurer for an advise specific to your policy.

mustafa: Are ULIPs better than pension plans?

Ashish Vohra: Unit Linked (commonly known as ULIPs) is a platform for product design. There are unit linked and traditional retirement products available in the market. In case your need is to plan for retirement and you still have time on your side as well as the appetite for investment risk, Unit Linked Pension Plans could be a good option. Please consult a professional advisor for need analysis and solution.

Gadgets-Gaming: Sir, tell me 5 most important things on how sall I plan my retirement to earn Rs 1 cr in 10 years. I am 40 now

Ashish Vohra: How did you arrive at the figure of Rs 1 cr.? Please follow these steps: How much you require at the time of retirement - you have mentioned Rs 1 cr., but would suggest to consult a financial advisor to calculate the corpus required at the retirement age and the monthly savings you need to make to achieve that.