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You are born a child, carefree and happy. Then you become an adult with a bucket of responsibilities to carry around. Soon you become old. Then again you are carefree and happy, it’s almost like you get to live your childhood again. They say retirement is wonderful since you can do nothing and no one can reprimand you for that either.
However, in order to ensure that you have a smooth and hassle-free retirement period, you should have a retirement plan in place. Buying a retirement plan aims at creating sufficient funds for your perusal when you no longer have a fixed source of income. In order to ensure that you are financially secure to fulfill all your dreams post retirement, you should invest in a pension plan. While you are working, it is possible for you to avail a pension plan. This plan will keep aside some amount of your current income as retirement expenditure. This plan will help you keep aside money from your current income, for your post-retirement expenditure. Over the years, you will be able to accumulate funds for your leisurely delights — be it a restaurant of your own, a travel expedition or a quiet life in the countryside; you’ll be ready to live yet another great phase of your life.
What are pension plans?
Pension plans are products provided by insurance companies. When an individual opts for a pension plan, he/she will have to pay a premium amount which is used by the insurance company to invest in financial instruments. The returns earned build a corpus amount over the term period of the plan. Once the term of your pension plan term period expires, you can reap the benefits of the plan in the form of a regular income. The premium amount is also eligible for tax benefits.
Pension plans are also called annuity plans. The individual who opts for a pension plan will have to define the age of retirement – the age at which the insured chooses to discontinue work, whether it is a business or a job. In order to ensure regular payments throughout the policy holder’s retirement period, the individual will have to pay either a lump sum amount or make annual payments.
Why is it important to take pension plans?
When you become old, being financially dependent on others is a bane. You will always have to rely on them for any financial decision you want to take. This will limit your freedom, and make your retirement period a stressful one. During your retirement, your income will decrease or diminish, however, your expenses will remain the same. In some circumstances, they might increase as well. In order to fund these increasing expenses on your own, it is imperative that you have a pension plan in place.
Getting a pension plan is prudent to ensure your retirement shapes out exactly how you planned it. Enjoy your childhood one more time, be carefree and happy in your old age as well!