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When Should I Start Investing In A Pension Plan?

Published On Jan 11, 2022 10:00 AM By InsuranceDekho

In India, the majority of people feel that saving money is the only way to achieve financial independence and stability. We believe that putting money aside will provide us with a solid financial future. However, it is a truth that urban Indians do not give their retirement plans much thought. To have a secure future and a stress-free financial living, you must have a pension plan in place.

How early you wish to retire will impact the sort of daily schedule you will have after retirement. Choosing the right plan for your requirements and financial objectives is a tough but important decision, but it will help you live a better life once you retire. As you become older, choose the best solution to fit your financial needs. All you have to do now is choose the finest retirement plan for you out of the various options available. To find out more info on the right time to invest in a pension plan, read on.

When Should A Person Start Investmenting In Pension Plans?

An individual should start investing in pension plans as soon as they get a job. Only if you start preparing early on will you be able to build a corpus that is suitable for protecting you when you are no longer employed. This is why, from the first day of employment, most firms require people to save 12 percent of their basic pay. If your company or institution already has a pension plan in place, great; otherwise, a savings plan that deducts 12% of your regular salary and provides the same benefits when you retire is excellent.

Benefits Of Starting Investments In A Pension Plan Early

Following are some of the listed benefits of starting investments in a pension plan early -

1. Tax Benefits Of Pension Plans

One of the most significant advantages of an early pension plan is the tax benefits. You may save money on taxes by investing your earnings in implausible plans. Pension schemes also allow you to diversify your tax payments.

2. Safeguard Your Assets And Have A Secure Future

You don't need to sell your possessions to increase your pension amount. You don't have to rely on your possessions if you invest in a pension plan. As a result, early pension schemes can assist you in securing your financial future.

3. Better Returns On Savings

Keeping your money in the bank has limited advantages. Investment alternatives might help you increase your profits by providing higher returns. Investing in retirement plans yields a larger return than saving in the bank.

4. Power Of Compounding For Pension Corpus

We all believe that by saving a portion of our salary, we can construct a sufficient pension fund. This technique, however, is inefficient since we did not account for inflation. Compounding is a powerful tool that may help you build a larger pension fund.

5. Unprecedented Emergencies

A pension plan might assist you in dealing with unanticipated medical issues. If you have a pension plan, you can use cash when you need it. Keep in mind that as you become older, your medical costs will inevitably rise.

6. Support Your Dependants

You can support your dependant if you have a solid strategy in place. Retirement plans provide financial stability to your dependants by acting as a financial buffer. With careful financial preparation, you may be assured that you will not lose income once you retire.

7. Start Early For Maximum Benefits

To get the most out of your retirement plan, you'll need to start early. Beginning to invest in your early 20s is the greatest option for any early retirement strategy. You will be able to extend your tenure and pay cheaper premiums as a result of this.


You may make up for any loss by bridging the gap if you start in your late 20s or early 30s. Determine your retirement age and needs, then begin saving for retirement.

Also read - 5 Investment Options For Retired

Pradhan Mantri Kisan Maandhan Yojana - Know The Basics

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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