Retirement Planning for NRIs

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Key Takeaways: If you are an NRI living abroad, India provides several investment opportunities to help you meet your retirement goals and expenses. Read on to know more!

Once you reach a particular life-stage, you will have to start thinking about your life after retirement and start planning for it. As an NRI, you have two choices; you may want to continue staying abroad or move back to India. Whatever be your choice, it will take some amount of planning, especially on the financial front. It’s good to have a reliable retirement plan in place so that you can spend this new chapter in your life free of worries. Here are some tips to help you plan.

Types of Retirement Plans in India for NRIs

When planning your investments for retirement, ask yourself questions like at what age do you wish to retire? What city/location do you see yourself settling down in? What kind of a lifestyle do you see yourself leading? Your retirement fund should be able to withstand living expenses for the rest of your life and additional expenses like children’s marriage/studies, healthcare, hobbies/entertainment, taxes, social obligations, and emergency expenses.

Create a customised retirement plan by discussing your future goals and financial commitments with your bank or financial partner. Here are some great options for investing in India to build your retirement fund:

• Fixed Deposits

Fixed Deposits (FDs) are a relatively risk-free investment option giving average returns. The rate of interest depends on the bank, deposit amount and tenure of the deposit.

• Mutual Funds

Mutual Funds have varied levels of risk and rates of returns depending on the type of fund you’ve invested in, like debt, equity or hybrid.

• Stocks and bonds

You can invest in the Indian stock market. These are high-risk investments but give you great returns if handled well. NRIs can also freely invest in Government securities and bonds. You can opt for ones with fixed or floating interest rates.

• Real estate

You can invest in residential or commercial real estate. This property can then be used to earn rent or be sold for profit once its price appreciates sufficiently. Residential properties are considered low risk because you will find buyers and sellers in any economy, upward or downward. Commercial real estate investments have higher returns and are more risky. However, for both options, we suggest you seek professional guidance before investing.

• National Pension Scheme:

You can also open an eNPS account if you have a PAN or Aadhaar card and are between 18 and 60 years of age. The earlier you start investing in a National Pension Scheme (NPS), the less risky it is for you. Since an NPS comprises of a combination of asset classes (debt and equity), the longer the investment horizon, the higher are the chances that early losses can get offset against long-term gains.

Retirement Planning Tips

You can start investing early with a long-term plan. Let’s say you aim to retire by the time you are 60; then we recommend you start investing in your 40s. If you are planning to switch countries post-retirement, you may want to evaluate your ability to adapt to a new socio-cultural climate. It also means factoring in the cost of relocation, finding a new home and moving your furniture and other possessions. Here is what you can do to ensure that you have sufficient funds to see you through retirement.

Estimate Your Post-Retirement Financial Needs Accurately

When estimating your retirement budget, keep in mind inflation and cost appreciation. Your living expenses might be higher than what they are currently. You also need to factor in other costs you might undertake as a retired person, including medical/healthcare expenses, an emergency expense due to a natural calamity, etc.

Consider the Pros and Cons of All Investment Plans

It helps to research any investment option before you put your money in it. You can start by referring to investment insights and expert opinions to help you build a reliable investment portfolio.

Provide for Risks and Returns

If you are considering high-risk high-return investments, it would help to invest in them when you have a longer investment horizon. For example, stocks tend to be sensitive to short-term market volatilities but over time (10 years), they may appreciate in value.

Final Note: Start planning for your retirement early so that you can shore up sufficient funds to tide you through your post-retirement years.

There is no better way to start retirement planning than with Asia’s Safest Bank for 12 consecutive years. Get started with an NRI account with DBS Treasures now.

Disclaimer: This article is published purely from an information perspective and it should not be deduced that the offering is available from DBS Bank India Limited or in partnership with any of its channel partners. The purpose of the Live eNRIched blog is not to provide advice but to provide information. Sound professional advice should be taken before making any investment decisions. The bank will not be responsible for any tax loss/other loss suffered by a person acting on the above.