Wednesday, December 1, 2010

Retirement Planning

In this article, I am not going to talk about what one should do towards retirement planning, but rather why one should  go for one and what risks one carries.

Gone are the days, that post retirement, the government will pay you all your life. This is the age of private companies and the pay scales are apparently much higher. But unless you dont save up your own money for retirement, trust me, you are going to have a tough time down the line.

If you are working in a private company, the only two places where the company invests for you normally would be in the Provident fund and the Gratuity. Gratuity is given to you, only if you spend more than 5 years in the company. While provident is given to irrespective of the amount of your stint in the company.

What I have observed in today's life is that, with every change or a job hop, one withdraws the PF which had been accrued by the company and ofcourse there are many ways one can spend it. But the problem here is that, this money which was meant for your retirement is no longer available. In simple words, the money which was supposed to be supporting you when you are not working, is consumed during the period where you are earning.

So what should we do ?
Well the answer is simple. Plan for your retirement properly. Investment in various options which are available for retirement planning.
Don't withdraw your PF fund. Just get it transferred from your old company to your new one.  Also note that, if your PF is withdrawn, then there is a tax which is charged on the same.

If you are close to 5 years in the company, then make sure you complete 5 years and claim the gratuity and put it into a good investment instrument which gives a good return.

On what instruments to invest for retirement planning, I will come back on that in my subsequent articles.


  1. Excellent. Withdrawing pf with a new job is illegal though. Nowadays pf yields 9.5% interest which is also a good investment.

  2. Definitely your post provides a great and useful resource every reader must adhere. This is truly a must read and admire. Thanks a lot for sharing!

    retirement planner jacksonville