7 Super Retirement Income Tips for NRIs

Most of us want to keep living the same way, if not better when we retire. As a non-resident Indian (NRI), you have to decide on a lot of things about your retirement. And if you want to make this dream come true, you need to plan your money very carefully.

It is more important for an NRI, than for a resident in India, to plan for retirement income. But if you plan ahead, you can put your money to work for you and provide the income you desire after your retirement.

Our 7 tips for NRIs will help them plan their retirement income and get ready for the future.

NRIs need to plan their finances more than most other people do. You have to make a lot of choices about your retirement years before you actually retire.

As you start to plan for retirement income, you will have to answer the following questions:

• You may have moved to your host country because you wanted a better life. Will the money you put away for retirement allow you to keep living this way? Or do you want to spend your retirement back in India?
• How will the exchange rate, inflation, and changes in the value of money in the future affect your retirement fund?
• Most governments offer tax breaks or credits to people who save for retirement. As a non-resident, what are the tax implications of putting money away for retirement?
• What kinds of investments are open to you as an NRI? Is your portfolio of investments spread out enough in terms of risk?

So, as an NRI, how do you plan for your retirement income?

When deciding how much to save each month and where to invest your money, you should think about the following financial choices that will affect your retirement:

Life expectancy: The average Indian is living longer than they used to. Since people are living longer, they have to plan more carefully to make sure they can live well for as long as they can. Will your retirement contributions allow you to maintain your lifestyle?

Exchange Rate: If you have savings or pension funds in a foreign currency, you can exchange them for INR. Usually, the exchange rate works out well for you. You can also sometimes move a retirement fund from another country to an INR retirement annuity.

Expenses: Your expenses will depend on how you want to live in retirement, but there are also some new costs you need to think about. Medical bills and equipment get more expensive as you get older. Make sure you have a plan.

Inflation: Rates of inflation tend to be higher in developing economies like India. When making plans for your retirement, you need to think about how much things will really cost in the future.

7 Tips for NRIs on how to plan for retirement income

Your process of planning for retirement is unique to you. It depends on where you want to retire, how you want to live, and what kind of retirement plan you want.

You need to start making plans for your retirement income as soon as you can. How much money you need in your retirement fund will depend on where and how you want to live when you’re old. The type of investments you make will depend on when you want to retire.

1. Think about your “where,” “when,” and “how.”

The first thing you need to decide about retirement is which country you want to live in.

Even though you don’t live in India right now, you might want to retire there. People often decide to retire in India because the money they earned outside of India gives them more buying power, which means they can live better in India than in their host country.

You also have to choose when you will stop working. This choice will affect how you should invest your money in your retirement portfolio. The earlier you start saving for retirement, the more powerful and helpful compound interest will be.

You decide how you’ll spend your retirement. You can save money, retire early, and live simply, depending on how you want to live after you retire. But putting money into a pension fund or retirement annuity every month is the most common way to plan for retirement income. You might have a pension fund in your host country that can be turned into an INR retirement annuity. You can also invest in the financial instruments for NRIs to get the most insurance and tax benefits.

2. Know what you want out of retirement.

Your retirement goals show how you want to live once you’re no longer working. Most of us want to keep living the same way, if not better when we retire. We need to plan for this to happen.

You need to think about how much your retirement goals will cost. Plan ahead if you want to go on a trip or start a new hobby. If you want to live close to your grandchildren, you need to be able to afford to retire near where they live.

3. Find ways to invest in India.

If you don’t have a pension fund in your host country or just want to spread out your investments, you might want to look into India. When you do this often, you can get the most out of your insurance and tax benefits.

You can invest in any of the following things in India:

Mutual Funds: As an NRI, you can invest in monthly income plans and mutual fund schemes.

ULIP: ULIPs are similar to Mutual Funds, but with the additional benefits of life insurance. Gains on ULIPs are also exempt from Long Term Capital Gains (LTCG) tax, with certain limitations.

Equity: You can invest in direct equity through an account that is linked to your non-resident external (NRE) account or your non-resident ordinary (NRO) account.

Endowment Plan: An endowment policy is a type of life insurance policy designed to pay a tax-free lump sum on maturity or on death. An endowment policy can be used to build a risk-free savings corpus while providing financial protection for the family in case of an unfortunate event.

Fixed Deposits: If you link a fixed deposit to your NRE, you can get bank interest that isn’t taxed.

National Pension Scheme: If you are an NRI and invest in the National Pension Scheme, you get the same insurance and tax benefits as a resident.

Real estate: As an NRI, you can’t own farmland, but you can invest in residential and commercial property.

4. Start young.

Don’t wait until you’re older to start saving for your retirement. You need to save money and make investments every chance you get. The longer and harder your money works for you, the earlier you start saving for retirement. Compound interest works best over a long period of time.

5. Try to be as accurate as you can.

Plan your budget for retirement as accurately as you can. If you don’t think about how much money you’ll need in retirement, you may make bad choices about investing early on.

6. Analyse the risks.

When you plan for your retirement, you need to think about the risk of your investments. Early on in your investment plan, a portfolio that is more volatile and has more risks can give you good growth. But as you get closer to retirement age, you want to protect yourself from risk by investing in retirement funds that payout benefits regularly.

7. Update your documentation regularly.

Keep your paperwork up-to-date so that investing doesn’t cause you any trouble.

Conclusion

As an NRI who is planning for retirement income, you have a lot of great choices. Once you know where, when, and how you want to retire, you can start making plans.

It’s best to start saving for retirement as soon as possible. To make sure your investments are well-balanced, you need to plan carefully. Find out what kinds of investments you can make in India to get the most insurance and tax benefits. You can make your money work for you, but it will take some planning and forethought.