It is true that entrepreneurs do not have a fixed retirement age in India like salaried employees. They could work as long as they wish but at the same time they do not have the security of provident fund savings or pension after they decide to take retirement.
That is why, it is absolutely important for the self-employed professionals and small business holders to work out their pension plans when they can still work. In fact, it is not possible for a person to work whole life. After certain age, you will eventually want to retire from your self-raised business. No matter how successful you are and how much you earn today, only a proper retirement planning could give you a peaceful retired life.
Are Pension Plans Only for Salaried People?
Since entrepreneurs have the freedom of working throughout his life, you might be wondering if self-employed professionals need a retirement planning at all. The answer would be, yes, they do require pension plans just like a salaried individual. Superannuation is not meant for only service holders but also small business owners and professionals. They are, surely free to choose their retirement age but sooner or later they will choose to retire. To make your retirement days vibrant and relaxing you need to work out your retirement savings goals just like job holders. Remember, after your retirement there would be no provident fund or pension to support your livelihood. So, it is wise to start saving for your old age security beforehand.
10 Reasons Entrepreneurs Consider Having Pension Plans
Nobody wants to live his retired life in full of worries. You can take the real fun of retirement days only when you feel secured. Sense of security only comes when you have saved enough for your future. In fact, small business professionals and entrepreneurs should be more careful about their pension plans because they do not have the security umbrella of EPF. Only with systematic planning and regular savings entrepreneurs can build corpus for their retired days. Here are the 10 major reasons why entrepreneurs should consider having their retirement plans:
- You Will Choose to Retire, Sooner or Later – No matter how much you love your work and how hard working you are today but at certain point of time you, surely, will choose to retire. It is true that being an entrepreneur you can work as long as you desire. But that does not mean that you will never feel the desire to retire someday. This is the reason you need pension plans for securing your retirement days.
- To Remain Self-Sufficient – Being an entrepreneur you have always stayed independent and self-sufficient. You may have never depended or worked for anyone in life but for yourself. So, retirement savings would keep you independent even after you choose to retire. It is wise to work out a proper pension planning at the very beginning of your career based on your requirements. While estimating your future requirements and expenditures always consider the growing age, rising cost of living and ever growing inflation rate. Your retirement savings goal should be determined considering all these factors. Only systematic pension plans can meet your retirement expenses, cope with inflation and at the same time keep you prepared for unpleasant turns of life without being depended on anyone.
- Value of Money deflates – Another important reason to build up corpus for your superannuation is that the value of money gradually deflates over time. It is wise to save greater than you aim for because by the time you retire your savings may seem smaller than your expenditure. It is, thus, a matter of extreme concern that your pension plans should be worked out considering such future problems.
- Greater Life Expectancy – With advanced medical technologies and greater awareness among people, life expectancy of a person has increased considerably. Greater longevity means you need more money to sustain the needs of your life for longer period of time. You superannuation planning should be adequate enough to provide a good life for longer period of time.
- To Stay Prepared – Your retirement savings is not only meant for providing your livelihood but also an instrument to deal with unexpected events of life. This would give you financial support at the time of unforeseen requirements. Be it your child’s marriage or medical expenses of you or your loved ones, you can stay always prepared for any sudden lump sum expenditures.
- To maintain Same Living Standard – The aim of pension plans also revolves around the fact that you would want to maintain similar living standard for the entire stretch of life or maybe a better lifestyle. The perfect picture of superannuation will only be completed if you have abundant wealth to relax in your retired life. You have no worries and burdens at this phase of your life.
- Unexpected Medical Expenditures – With growing age you can never be sure about your health problems. You have to stay prepared for such unexpected medical expenditures. Though you have a comprehensive health cover plan but you never know about sudden requirement of expenditures you need to make towards health issues.
- To Deal with Inflation – You need methodical and organized pension plans to ensure that you do not outlive your savings. Despite your hard earned savings and thorough retirement planning there still remains the risk of outliving your accumulated wealth far before your estimation. The increasing inflation is one big problem to deal with in your retirement plans.
- To Take Care of Your Other Responsibilities – Remember when you are planning for your retirement you do not plan for your own future but also for your loved ones. You might have other responsibilities, too, during your retirement. This retirement corpus is not just for providing your requirement but also your spouse’s.
- Leave Some Fortune for your Children – This may sound a little unnecessary but being an Indian parent you might also want to leave some fortune for your children or grand children too. It is a natural tendency of Indian parents to do more than they could do for their children’s future. That is the reason why your pension planning should be efficient enough to meet your requirement and maintain same living standard as before, keep you ever prepared for unexpected turns and at the same time save something extra for your children without compromising your own lifestyle.