The largest generation of the workforce can be millennials. Although millennials are large in number, they might not make the most of their income. As a millennial, you might spend your income on expensive items, which is why you might not contribute towards retirement. According to a survey, only 12% of millennials have taken steps towards saving for retirement.

Since retirement planning can be an inevitable part of your life, you should not delay the process. Beginning your retirement at a young age to meet your post-retirement goals, such as traveling, starting a new venture, and so on can be beneficial. The first step to begin your early retirement plan can to invest in the right retirement tools. Therefore, let’s go through the retirement tools that can be suitable for you as a millennial:

1. Unit Linked Insurance Plan (ULIP)

As a millennial, you might have aggressive investing behaviour. Due to your high risk-appetite, you can afford the market risks that can come with an equity investment under a ULIP policy. Being a market-linked product, you can receive relatively high returns based on market performance. Since you can generate more profits, you can eventually save more for your retirement. However, you should switch to debt funds under a ULIP policy after you cross the retirement age as your risk-tolerance can decrease. With a ULIP policy, you can maximise your returns before nearing the retirement age, and lower your risk after you accumulate enough funds for your retirement.

2. Annuity Plan

An annuity plan can allow you to generate regular income after the flow of your professional income stops. Typically, you can choose between the following types of annuity plans based on your evolving needs:

• Immediate annuity

Under an immediate annuity plan, you can receive the financial payout immediately during an emergency.

• Deferred annuity

The deferred annuity plan can be split into two phases, which can be as mentioned below:

1. Accumulation phase

During the accumulation phase, you can park your savings during the on-going tenure of the deferred annuity plan.

1. Vesting phase

After you cross the vesting age, you can be allowed to withdraw your accumulated funds for your daily use.

3. Pension plan

Pension plans have been in the market for a long time. Although it is a traditional financial product, you can buy life insurance policies to safeguard your retirement period as well as allow you to maintain your current standard of living after retirement. If anything happens to you during your on-going retirement period, it can provide your loved ones with a financial payout for their well-being in your absence. There are different pension plans, such as the National Pension Scheme (NPS), pension plans with life cover, and so on. Hence, choose the right pension plan based on your financial goals and needs of the family.

4. Individual Retirement Account (IRA)

IRA accounts can be the most popular plan available for millennials. To get started with an IRA account, you can open an account with either a bank or an insurance company. After your retirement period, you can receive money in return for your financial sustenance. Regardless of the work that you do for a living, you should open an IRA account. However, see to it that you wisely choose between a traditional IRA, ROTH IRA, self-employed IRA, and spousal IRA.

In a nutshell, an essential decision that you can make as a millennial for a smooth retirement period can be to save regularly. The amount of your invested capital can matter more than your investment choice. Therefore, see to it that you have adequate resources before you choose between the right retirement plans in India for your future. The right retirement instrument can depend on your risk appetite and post-retirement goals. Additionally, consult a professional if you are unable to understand how to retire early with adequate funds in hands.