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There are some crucial pointers that determines an NRI Retirement Plan’s success and failure. Key to that is whether the retirement plan is Retiree (NRI) centric or not. Especially NRI retirees need a unique way of planning.
As an NRI, are you completely satisfied in the way you have been planning for your retirement? If not, this article will tell you the most important points to know while planning for a soothing and safe retirement of an NRI.
As an NRI, it becomes more important to have a dipstick of various possible safer investments for when you retire and/or return back home. But what use does it serve to safe gurard a not sufficient corpus which is not going to be really useful?
A perfect retirement life is not comprehensible, but the best retirement plan for an NRI can be prepared with the following factors into consideration.
1. Have a Customized Retirement Plan
There are many ready-made pension plans and retirement plans available in the market which may appear to be impressive and easy to employ. But these plans have many hidden disadvantages which you would obviously find later in time.For example, you may choose to invest in the ‘NRI Pension Plan’ by Bajaj Alliance now and after a couple of years, you could find a better plan like the ‘Premium Pension Plan for NRI’ by LIC. In that case, you may not be able to exit from the previous plan.
If you want to exit from such a pension plan, then you must tolerate a big cut as exit load and most of
the times your payments will not be returned to you in whole but will be annuitised.
As discussed earlier, any ready-made pension plan will never be Retiree Centric. Also, a better plan could sprout every now and then, so it is always better to avoid such pre-cooked NRI pension plans. Instead, the best choice would be to create a customized retirement plan for yourself that can take care of all your requirements.
An NRI Retirement Plan must be completely created on the basis of your requirements and circumstance like – the time of your retirement, your preferred place of settlement after retirement, future goals and etc. In short, you need a Customized Retirement Plan. So it is advisable to design your own retirement plan along with the aid of a right Financial Planner.
2. The Right Time to Retire
As an NRI, it would be better for you to choose your retirement time as early as possible, because it can make you aware of the time-frame you are left with to generate money efficiently through work.
Some NRIs prefer to work till their retirement age, while others choose to retire early. It is important to decide when you will retire and what you would do post-retirement.
Targeting a retirement point allows you to work towards a timeline and plan your investments to meet that timeline. When you know the time left for your retirement, you will get a clear picture of how your retirement plan should be structured.
Most of the NRIs plan for early retirement when compared to Resident Indians.
The essence is that it is advisable to predict your retirement time and simultaneously start planning for your retirement as early as possible.
3. Homecoming
As an NRI you should have an idea about the appropriate place for you to settle after your retirement. You have to choose between settling in a foreign country or in India; your native village or a new city; urban or rural area and more.
While very few NRIs choose to settle down in the foreign country after retirement, most of the NRIs prefer to come back home on retirement where the roots are. Your finances and retirement plans are going to be affected largely by your homecoming.
Most NRIs opt to come back to their home bases or closest urban centres to their native as this suits their familial and comfort needs. Going back to your ancestral village or to an urban city will have different implications and costs for everyday living. In most instances, NRIs leave behind their children who plan to build their own careers.
So, it is essential to make decisions on your preferable relocation place after retirement site and how you see yourself supporting your children during their formative years and their life plans.
Apart from choosing the place to settle down, another most important factor to consider is the housing itself. If you own a house property in the locality where you wish to settle down, then it’s all fine. If not, then you have to make decisions on purchasing a house property or occupying a rented house. You may have to manage your finances accordingly.
4. Future Goals & Commitments
An NRI’s retirement plan must have mapped out financial strategies for
- Buying assets
- Saving for your children’s education and marriage
- Maintaining a post-retirement lifestyle
- Building an Emergency Funds
- Medical Insurance
- Planning for holidays
- Other future desires for things you always wanted to do.
This will give you a careful understanding of how much to spend today; where, when, and what to save for your future plans. Retirement Investments aren’t just about savings but are also means to make your finances grow for a time when you aren’t earning as much. Envisage that future and begin today.
An NRI should choose the currency in which he makes the investment depending on where the goals are to be achieved, in India or abroad If the goal to be achieved is in India after retirement, then he can invest in Indian Rupees, so that maturity proceeds will help him meet the goal in Indian Rupees.
If the goal to be achieved is in the US after retirement, then he can invest in USD, so that the maturity proceeds will help him meet the goal in USD.
This way, the currency fluctuations will not affect the NRI from meeting his retirement goals and other goals.
The effect of Inflation should also be seriously considered, since it can bring a huge impact to the purchasing power of your money.
5. Understanding your Investment Options
Earning is hard – saving the earnings is even harder – and most of all investing the savings is the hardest. To make the optimal investment choices, you first need to have a precise set of your needs to be served from those investments and before that a keen understanding of the investments is a mandate.
You must have flexible retirement investment plans to suit your retirement requirements. There is a huge array of investment options in the market like NRI Pension Plans and the challenge is to choose wisely for what works best for you as an NRI.
You should consider exchange rates, the stability of returns and longevity of your investment options. Your investments should allow for the best possible tax benefits now and ideally tax-free income in future.
Do remember that for an NRI, the NRE accounts work better for remittances and investment planning in foreign currency. Also, it is better to decide in advance about ‘do you need to repatriate the redemption proceeds or not?’.
Always aggregate your investments over a broad range of investments in such a way that the returns are spread over a period of time and do not result in lean patches, as critical moments like illnesses, eventualities, marriage, and birth of grand children often come unannounced.
6. Consult a Financial Advisor having online presence
It is advisable to consult a professional financial planner before making the decision since a piece of advice from the expert would always be valuable and can make a solid difference. As an NRI you need to choose a financial advisor who has got an online presence and flexibile ways to contact. The financial advisor should be in a position to advise you through exchange of emails, calls or video-calls whenever you need.
Facilitating the transactions online and online access to the investment portfolio will really add value to NRI investors.
The best retirement plan for an NRI must be prepared with all the aforementioned points into consideration. Also the retirement plan should avoid making the following mistakes especially in case of NRI retirees.
7. An NRI’s Common Mistake to Avoid
Never make an investment without comprehending its pros and cons. There could be a plan that works in a specific way in a foreign country, and works completely different when chosen in India. Such are common retirement planning mistakes but can make a potential change to your finances and needs to be certainly avoided.
In most cases, these mistakes could only be foreseen by expert Financial Planners. That is why we suggested earlier to take assistance from a Professional Financial Advisors for the best possible NRI Retirement Plan.
Final verse
“The essence of planning is to choose what to do & what not to do”.
Your retirement life & financial freedom of tomorrow depends on the investments decisions you are making now. So, move ahead towards the future backed by the right plan!
I hope this article has got everything to set you on a track for the best possible NRI retirement plan that is retiree centric and would not fail you at any point.
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