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Market believers can also build strong pensions with annuities

Market believers can also build strong pensions with annuities
The new retirement question: Can market believers also build a strong pension? · businesstoday.in

When you grow up and stop working, you need money to live on.

Some people save money by investing it in the stock market, which can grow but can also go down.

Others buy something called an annuity, where you give a company a big amount of money and they promise to pay you a little bit every month for the rest of your life.

An expert named Sarkar says you don't have to pick just one.

When you are young, you can invest in the market to grow your savings.

When you get closer to retirement, you can turn some of that money into an annuity to make sure you always have enough for basics.

This protects you if the stock market crashes right when you retire.

In India's National Pension System, people who retire at 60 can take out up to 60% of their savings at once.

The rest, at least 40%, must be used to buy an annuity.

There are also special annuities for couples, so the money keeps coming even if one person passes away.

Key facts

Core advice
Combine market-linked investments with annuities rather than choosing one
NPS retirement age
60
NPS lump-sum withdrawal
Up to 60% of accumulated corpus
NPS annuity requirement
At least 40% must be used to purchase an annuity from an approved life insurer
Annuity types
Immediate, deferred, variable, and joint-life
Key risks addressed
Longevity risk and market volatility at retirement
Sarkar's description of annuities
An 'economic shock absorber'

Quotes

Sarkar

Financial advisor discussing annuities

“By investing a lump sum with an insurer, you lock in a regular, reliable stream of income that continues for the rest of your life, regardless of market conditions.”
businesstoday.in
“The strength of a joint life annuity lies in its continuity.”
businesstoday.in

Sources

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