Your existing retirement benefit plans would vary from person to person depending upon the kind of employment, saving patterns followed, etc. Before going in for a comprehensive retirement plan, it is necessary that you asses the existing retirement benefit plans and build your retirement plan around them so as to meet the required additional needs.
As discussed in our earlier article, assessing your existing retirement benefit plans forms the first step in effective retirement planning. To start with, your may have an entirely different set of existing retirement plans based on your employment.
Retirement Plans based on your employment type
Employees of Government or Established Organizations
In case of you are employed in a well established organization or in the service of a Government establishment, you will have a very well protected retirement benefit structure, which may include
- Contributory Employee Provident Fund,
- Gratuity benefit (payable on normal retirement and protected in case of death in harness as well as premature retirement)
- Guaranteed stream of regular retirement income by way of pensions.
While, the first two benefits provide for a lump sum payment on cessation of service, the third one provides for the much needed regular income, albeit, on a reduced scale on retirement.
Over and above this there can be well-covered group insurance benefits, protection of income in case of inability to attend work due to illness and disability, accident and disability cash benefits while in service with subsidized medical insurance schemes running even after retirement.
Self Employed Professional
On the other hand, if the individual is a self employed professional, he may not have any of the above benefits from his employment, but could have built saving arrangements through
- Public Provident Fund,
- Endowment type life insurance policies maturing at or around the chosen retirement age,
- Deferred annuity plans from life insurance companies, or
- Long Term Care type plan from a General Insurance Company, long term medical insurance plans covering periods into retired life, etc.
While the purpose for starting such saving arrangements may be anything other than retirement planning, like income tax savings, short term expenditure needs, collateral security for loans availed, etc., they still help in the retirement needs fulfillment.
Employees of Private Sector Establishments
Individuals employed in Private sector establishments or in the unorganized sectors may have one or more of the retirement benefits we saw above and could have some saving arrangements that could aid retirement planning.
These retirement plans may not be sufficient for your actual retirement needs, however they provide a good starting point for preparing yourself an effective retirement plan. By assessing your existing retirement plans you can know their individual potentials and identify the gaps. Once this is done, you can start filling these gaps and augmenting these plans in line with your retirement planning objectives.