2024-05-14 6 Min read
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In the last decade, India’s investment landscape has witnessed a significant transformation. This shift includes an increase in the number of high-net-worth individuals in the country. Nevertheless, merely having and accumulating wealth is insufficient; strategic saving and investment are imperative for securing a comfortable retirement. So, let us explore what retirement planning means for HNIs and what they need to do in order to enjoy the fruits of their success well into their golden years.
Retirement planning for HNIs
Simply put, a high-net-worth individual is someone with a significant net worth. In India, generally, the people who have investable assets of more than INR 10 crores1 fall into the HNI category. These individuals could be business owners, entrepreneurs, corporate professionals, or inheritors. If you fall into the high-net-worth individual (HNI) category in India, congratulations on being a part of the top 1% of the population.
Retirement planning is paramount for high-net-worth individuals (HNIs) as it ensures the maintenance of their affluent lifestyle and financial security post their retirement. As an HNI, you need to navigate through a complex financial landscape, considering diverse investments and your tax implications. It is only through strategic retirement planning that you can optimise wealth, preserve assets, and allocate resources efficiently. It safeguards against unforeseen economic fluctuations and healthcare costs, fostering a comfortable retirement. Additionally, you can leverage tax-efficient retirement strategies to maximise savings. By proactively addressing these aspects, HNIs can secure a dignified and stress-free retirement.
Retirement planning is paramount for high-net-worth individuals (HNIs) as it ensures the maintenance of their affluent lifestyle and financial security post their retirement. As an HNI, you need to navigate through a complex financial landscape, considering diverse investments and your tax implications. It is only through strategic retirement planning that you can optimise wealth, preserve assets, and allocate resources efficiently. It safeguards against unforeseen economic fluctuations and healthcare costs, fostering a comfortable retirement. Additionally, you can leverage tax-efficient retirement strategies to maximise savings. By proactively addressing these aspects, HNIs can secure a dignified and stress-free retirement.
Retirement planning strategies for HNIs
Retirement planning involves a series of smart investment decisions that can offer ROI (Return On Investment) throughout your retirement age. Savings alone can never be sufficient, especially for HNIs. Investment is quintessential for a substantially luxurious retirement life. Here are some retirement planning strategies that can be quite helpful for HNIs:
1.Bringing a retirement plan in place
The first and the primary step will be carving out a retirement plan. Until you set a lump-sum budget, achieving a financial goal can be tough and retirement planning is no exception to it. You need to take into account the total income in your retirement life and the expected expenses. Along with this, inflation, tax payments, and rising healthcare expenses must also be taken into account.
2.Diversifying your portfolio
Once you have a retirement plan, now is the time to diversify your retirement portfolio. Depending on one source of income, savings, or investment is not a sustainable idea. To mitigate the risk of downfall and maximise the returns, your retirement portfolio has to have different asset allocations like government schemes, debts and equities, real estate, and so on.
3.Seeking professional advice
As an HNI, you may have various financial assets, investments, and savings. Managing all these platforms along with carving out a reliable retirement plan can be daunting. For this task, you may take the help of a professional, someone who is an expert in the field of finance management and retirement planning.
4.Starting early
Early birds get the best deals. Well, early retirement planning refers to an early age. The sooner you start planning your retirement, the better your chances to earn favourable returns. At a younger age, you may have fewer liabilities and more money power that can be utilised for careful investments. So, now is the right time to begin with diversifying your portfolio.
5.Investing in insurance plans
Medical expenses are on a constant rise and seeking quality medication is usually a part of HNIs lifestyle. With growing age, the need for medical assistance only increases. To cope with the medical expenses in your retirement life without making any compromises, investing in the right kind of insurance plan can be a wise decision.
1.Bringing a retirement plan in place
The first and the primary step will be carving out a retirement plan. Until you set a lump-sum budget, achieving a financial goal can be tough and retirement planning is no exception to it. You need to take into account the total income in your retirement life and the expected expenses. Along with this, inflation, tax payments, and rising healthcare expenses must also be taken into account.
2.Diversifying your portfolio
Once you have a retirement plan, now is the time to diversify your retirement portfolio. Depending on one source of income, savings, or investment is not a sustainable idea. To mitigate the risk of downfall and maximise the returns, your retirement portfolio has to have different asset allocations like government schemes, debts and equities, real estate, and so on.
3.Seeking professional advice
As an HNI, you may have various financial assets, investments, and savings. Managing all these platforms along with carving out a reliable retirement plan can be daunting. For this task, you may take the help of a professional, someone who is an expert in the field of finance management and retirement planning.
4.Starting early
Early birds get the best deals. Well, early retirement planning refers to an early age. The sooner you start planning your retirement, the better your chances to earn favourable returns. At a younger age, you may have fewer liabilities and more money power that can be utilised for careful investments. So, now is the right time to begin with diversifying your portfolio.
5.Investing in insurance plans
Medical expenses are on a constant rise and seeking quality medication is usually a part of HNIs lifestyle. With growing age, the need for medical assistance only increases. To cope with the medical expenses in your retirement life without making any compromises, investing in the right kind of insurance plan can be a wise decision.
Century Royale: Your Solution to Smart Wealth Growth
There is no denying that as an HNI, you have a very wide range of investment options, such as private equities, real estate, structured products like bonds and stocks, etc. However, these investment options come with their own set of challenges. Most of these investments are influenced by market fluctuations, exposing HNIs to the inherent unpredictability of global financial markets. Also, the intricate nature of these instruments, which are designed for higher returns, entails a heightened level of risk. They demand vigilant risk management and strategic diversification.
In such a scenario, life insurance serves as a crucial financial tool, providing a safety net against uncertainties. For HNIs, a well-structured life insurance portfolio not only safeguards family wealth but also provides stability and peace of mind amid the intricacies of their affluent lifestyles. It is common to believe that life insurance plans are a source of financial protection for your loved ones. However, with an endowment plan, you could also save for your long-term goals, such as retirement.
Star Union Dai-ichi Century Royale Life Insurance stands as your ideal partner, offering a meticulously crafted range of benefits. The monetary benefits that the policy generates for you can be used for funding your retirement. The lump sum amount that you receive acts as a source of income.
As an HNI, if you wish to do away with the financial burden of paying the premiums for long, Century Royale is indeed a great option. Being a limited pay option, Century Royale allows you the freedom to choose between a 7-year or a 12-year premium payment option. The coverage, however, can be up to 40 and 45 years, respectively. Simply put, for such a long coverage, you pay the premium only for a limited period. The chances of a policy lapse are significantly lower as the premiums are payable for a short duration. Once the payment period is over, the payout period begins from the 10th policy year for the 7-year PPT and the 15th policy year for the 12-year PPT.
Apart from this, Century Royale also allows you liquidity. Once your endowment plan has acquired a surrender value, you can get up to 70% of the surrender value as a loan. As an HNI, tax benefits might be vital to you. The premiums that are paid towards the policy are tax exempted up to INR 1.5 lakhs in a financial year under Section 80C of the Income Tax Act. Please keep in mind that to claim this deduction, the premium paid should not be more than 10% of the sum assured (assuming that the policy was issued after 1 April 2012).
The maturity amount and the death amount received by the insured or the nominee are fully exempt from tax under Section 10(10D). For policies issued after 1 April 2012, if the premium is more than 10% of the sum assured, the maturity benefits will be treated as ‘income from other sources’ and will be taxable.
In such a scenario, life insurance serves as a crucial financial tool, providing a safety net against uncertainties. For HNIs, a well-structured life insurance portfolio not only safeguards family wealth but also provides stability and peace of mind amid the intricacies of their affluent lifestyles. It is common to believe that life insurance plans are a source of financial protection for your loved ones. However, with an endowment plan, you could also save for your long-term goals, such as retirement.
Star Union Dai-ichi Century Royale Life Insurance stands as your ideal partner, offering a meticulously crafted range of benefits. The monetary benefits that the policy generates for you can be used for funding your retirement. The lump sum amount that you receive acts as a source of income.
As an HNI, if you wish to do away with the financial burden of paying the premiums for long, Century Royale is indeed a great option. Being a limited pay option, Century Royale allows you the freedom to choose between a 7-year or a 12-year premium payment option. The coverage, however, can be up to 40 and 45 years, respectively. Simply put, for such a long coverage, you pay the premium only for a limited period. The chances of a policy lapse are significantly lower as the premiums are payable for a short duration. Once the payment period is over, the payout period begins from the 10th policy year for the 7-year PPT and the 15th policy year for the 12-year PPT.
Apart from this, Century Royale also allows you liquidity. Once your endowment plan has acquired a surrender value, you can get up to 70% of the surrender value as a loan. As an HNI, tax benefits might be vital to you. The premiums that are paid towards the policy are tax exempted up to INR 1.5 lakhs in a financial year under Section 80C of the Income Tax Act. Please keep in mind that to claim this deduction, the premium paid should not be more than 10% of the sum assured (assuming that the policy was issued after 1 April 2012).
The maturity amount and the death amount received by the insured or the nominee are fully exempt from tax under Section 10(10D). For policies issued after 1 April 2012, if the premium is more than 10% of the sum assured, the maturity benefits will be treated as ‘income from other sources’ and will be taxable.
Required Documents
The documentation process for NRIs is straightforward but involves some special paperwork:
● Identity Proof: A copy of the passport is needed to confirm the identity of the NRI.
● Address Proof: Attested documents attesting to the NRI’s overseas residential address.
● Income Proof: The income level may be determined by the NRI with recent pay slips, income tax returns, or an employment letter.
● Medical Records: The risk and the premium may require medical examinations depending on the policy and the insurer.
● Identity Proof: A copy of the passport is needed to confirm the identity of the NRI.
● Address Proof: Attested documents attesting to the NRI’s overseas residential address.
● Income Proof: The income level may be determined by the NRI with recent pay slips, income tax returns, or an employment letter.
● Medical Records: The risk and the premium may require medical examinations depending on the policy and the insurer.
Conclusion
Keeping in mind the distinct and individual nature of investment journeys, the requisites and expectations differ from one individual to another. Cookie-cutter or one-size-fits-all solutions become obsolete and risky. Each investment approach has to be tailored to align with the specific and unique characteristics of an individual’s financial landscape, considering the necessary factors such as risk tolerance, returns, time horizons, and investment objectives.
In India today, HNIs and Ultra HNIs possess wealth ranging from INR 10 crores to several billions. Having achieved a notable level of financial success, you can now prioritise wealth preservation, growth, and legacy planning. With diverse investment goals like establishing a robust retirement fund, financing your children’s education, or leaving a legacy, you can extend your goals beyond mere accumulation of wealth.
Reference: SUD Life Century Royale | UIN: 142N083V01
In India today, HNIs and Ultra HNIs possess wealth ranging from INR 10 crores to several billions. Having achieved a notable level of financial success, you can now prioritise wealth preservation, growth, and legacy planning. With diverse investment goals like establishing a robust retirement fund, financing your children’s education, or leaving a legacy, you can extend your goals beyond mere accumulation of wealth.
Reference: SUD Life Century Royale | UIN: 142N083V01
Disclaimer
Star Union Dai-ichi Life Insurance Company Limited IRDAI Regn. No: 142 | CIN: U66010MH2007PLC174472
Registered Office: 11th Floor, Vishwaroop I.T. Park, Plot No. 34, 35 & 38, Sector 30A of IIP, Vashi, Navi Mumbai – 400 703 | Contact No: +91 22 7196 6200 | 1800 266 8833 (Toll Free) | Timing: 9:00 am – 7:00 pm (Mon – Sat)| Email ID: customercare@sudlife.in | Visit: www.sudlife.in | For more details on risk factors, terms and conditions, please refer to the sales brochure carefully, before concluding the sale. |Trade-logo displayed belongs to M/s Bank of India, M/s Union Bank of India and M/s Dai-ichi Life International Holdings LLC and are being used by Star Union Dai-ichi Life Insurance Co. Ltd. under license.
Registered Office: 11th Floor, Vishwaroop I.T. Park, Plot No. 34, 35 & 38, Sector 30A of IIP, Vashi, Navi Mumbai – 400 703 | Contact No: +91 22 7196 6200 | 1800 266 8833 (Toll Free) | Timing: 9:00 am – 7:00 pm (Mon – Sat)| Email ID: customercare@sudlife.in | Visit: www.sudlife.in | For more details on risk factors, terms and conditions, please refer to the sales brochure carefully, before concluding the sale. |Trade-logo displayed belongs to M/s Bank of India, M/s Union Bank of India and M/s Dai-ichi Life International Holdings LLC and are being used by Star Union Dai-ichi Life Insurance Co. Ltd. under license.
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