Retirement Planning

By providing financial protection against

the major 19th century risk of dying too
soon, life insurance industry became the
biggest financial industry of thecentury
Now
Providing financial protection against the
new risk of not dying too soon enough
may well become the next century’s major
and most profitable financial industry
Peter Drucker
 Most Populous countries 2018
Country Population (in Millions)
China 1,384
India 1,296
United States 329
Indonesia 262
Brazil 208
Pakistan 207
Nigeria 195
Bangladesh 159
Russia 142
 Most Populous countries 2050
Country Population (in Millions)
India 1,652
China 1,314
Nigeria 440
United States 400
Indonesia 366
Pakistan 363
Brazil 227
Bangladesh 202
Congo, Dem. Rep. 182
Emerging retirement
income market
Challenges
 Increasing Life Expectancy
Age
80
70
60
50
40
69 75
30 62 63 64 66 68
57 59 60 Age
20
10
0
Significant health problem
Almost one-half (47 percent)
of older Indians have at least
one chronic disease such as
asthma, angina, arthritis,
depression, hypertension or
diabetes
Fewer than 10 percent of Indians
have health insurance from private
or public sources, and about 72
percent of health care spending is
paid out-of-pocket
 Can’t forecast size of
their retirement bucket
 Emotional bias
Fear
Aggressiveness

Regret

Susceptibility

Inertia
 Nuclear family Structure and
inability of families to support
elderly
Low financial literacy
Literacy Ratio
Silver Lining
Savings ratio
India's Gross Savings Rate
India's Investment: % of GDP in Mar2018
Retirement planning is smartly shifting
purchasing power from period of high
earnings (the working years) to those
of low earnings(Retirement).
Get real about
Goals
Income
Outgoing
Components of a Solid Retirement Plan

oLifestyle
oIncome
oRisk Tolerance
oLong Term Care
oFinancial Advisory
Development of Retirement planning

Determine the annual income

(/spending) will be needed in each
year of retirement.

Determine required level of

accumulated retirement savings.

Determine required annual

contribution to retirement savings.
Development of Retirement planning
How much
monthly income is
required on
retirement after
if you spends
35 years ???
Rs 5000 per
month
today?
#1Future value of your spending

Current spending 5000.00

Inflation rate (pa.) 7%

Number of Years 30

Future cost of spending 38,601 Rs.

{Application of FV=PV(1+r)^n}

Rs 38601 per month in future for each year of retirement

life.
#2 Required level of accumulated retirement
savings.
Target Corpus
Expected Monthly Expenses 38,601 Rs.
annual Expenses (*12 months) 4,567,212 Rs.
Life expectancy after retirement 45,672,120 Rs.
(10 Yrs.)

*70 years life expectancy in India.

* Monthly expenses considered after 60 years.
#3.Required annual contribution to
retirement savings.
Targeted Starting age for Years to Yearly Monthly
Corpus retirement savings retirement savings savings

45672120 18 42 1087431 90619

45672120 25 35 1304918 108743
45672120 30 30 1522404 126867
45672120 35 25 1826885 152240
45672120 40 20 2283606 190301
45672120 45 15 3044808 253734
45672120 50 10 4567212 380601
How much you should have in retirement
savings at every age?

*The formula comes from retirement-plan provider Fidelity

 Various Retirement Schemes

LIC Jeevan Akshay VI Plan

LIC Jeevan Nidhi Plan:
SBI Life Saral Pension plan:
HDFC Life - Click2Retire:
 LIC Jeevan Akshay VI Plan
Features and benefits:
Premium paid in lump sum
Pension can be received either monthly, quarterly,
half yearly or yearly.
No medical examination required to avail of this
plan
Minimum purchase price of Rs 1 lakh for offline
distribution channels and Rs 1.50 lakhs for online
distribution channels
No maximum limits for purchase price, annuity etc
Minimum entry age is 30 years and maximum is
85 years
Age proof is mandatory
Premium paid is exempt from tax
 LIC Jeevan Nidhi Plan:
The LIC Jeevan Nidhi plan is a with profits pension plan. The
accumulated amount of the plan is used to generate pension
for the policyholder based on his or her survival past the policy
term.
Features and benefits:
Premiums paid are exempt under Section 80CCC of the
Income Tax Act
For the first five years, the policyholder will receive guaranteed
additions @ Rs.50/- per thousand Sum Assured for each
completed year
The policy will participate in profits of the corporation from the
sixth year onwards
Minimum basic Sum Assured is Rs 1 lakh under regular
premium and Rs 1.50 lakhs under single premium policies
No maximum limit for basic Sum Assured
Policy term ranges from 5 - 35 years
Minimum vesting age of 55 years and maximum of 65 years
SBI Life Saral Pension plan:

Features and benefits:

Guaranteed bonuses for the first 5 years
The policyholder is assured of vesting bonuses on maturity
of the plan
High loan tenure ranging from 10 - 40 years
Minimum premium payment of Rs 7,500 per annum with
no maximum limit
Minimum entry age is 18 years and maximum is 65 years
Minimum maturity age of 40 years and maximum of 70
years
Minimum Sum Assured of Rs 1 lakh with no maximum limit
HDFC Life - click2Retire:
Features and benefits:
Guaranteed vesting benefits as well as additional
gains from the market
Minimum entry age of 18 years and maximum of
65 years
Low maturity age of 45 years and maximum of 75
years
Death benefits to the nominee will be higher of the
fund value of the policy or 105% of premiums paid
till then
Tax benefits under Section 80C and Section
10(10A) of Income Tax Act 1961
HDFC Life - Assured Pension Plan:
Features and benefits:
Guaranteed vesting benefits as well as additional
gains from the market
Loyalty additions every alternate year from the
11th year onwards
Minimum entry age of 18 years and low maturity
age of 45 years
Limited and single pay options
Death benefits to the nominee will be higher of the
fund value of the policy or 105% of premiums paid
till then
Tax benefits under Section 80C and Section
10(10D) of Income Tax Act 1961
 In the End
It’s all about Arranging lifetime
consumption in the safest waypossible
given finite lifetime income over
building largest possible portfolio
constrained by risk tolerance.