Best Retirement Plans for your 40s

By the time people are in their 40s, most have already saved something for their retirement. Hitting 40 means reaching your peak productive years and you should be on your way to achieving a decent corpus as part of your retirement planning. However, life can sometimes be challenging and you might find it difficult to reach your financial goals.

Individuals in their 40s have multiple financial goals. They need to save for the university fees of their children, for the annual family holiday, and even for building a house. Every individual has different financial requirements but they all have one thing in common – the earlier they start saving the better.

Your 30s are an ideal time to switch into overdrive, but many people are only getting into first gear. There is a common misconception among individuals reaching their 40s; they believe they will save whatever they can and figure out their finances later. This is bad planning; the only thing that’s worse is to not have a financial plan at all.

Whatever your age, you need to have a financial plan suited to your lifestyle and your needs. You need to look at your debt and income while considering your future money requirements. So set your priorities and determine the amount you need to save for different needs in the future.

Here are some investment products that can help you save for your retirement:

National Pension Scheme

Can’t make up your mind what product to invest in? NPS is an ideal investment option. You invest a certain amount every year in this, which is invested in equity, debt, or government bonds. You have two options: auto choice and active choice. In the former, the funds will be managed by a fund manager, while in the latter the funds will be managed by you. The investment horizon is a few decades and you have the chance to multiply your money over a period of time. You also get a tax benefit of Rs 50,000.

Mutual Funds

The importance of investing in mutual funds cannot be overemphasised. Many prefer to invest in mutual funds through Systematic Investment Plans (SIPs) and watch their portfolio grow. This can generate returns ranging from 12% to 20% if you remain invested for a longer term. You can always switch between funds as you age and move from equity to debt as you approach retirement.

Public Provident Fund

A traditional investment option, PPF is risk-free and helps you save on tax while you earn interest on your investment. It has a lock-in period of 15 years and offers returns at the rate of 7.6% a year. You can invest between Rs 500 and Rs 1.5 lakh and are eligible for a tax benefit of Rs 1.5 lakh under Section 80C of the IT Act. Remember, the returns are tax-free.

Looking to invest in a Public Provident Fund? Click here to get started!

Annuity plan

An annuity plan is an ideal investment option for retirement planning. It will generate a specific amount each month in addition to the interest on the amount invested by you. You can start investing during your employment and receive the returns after you retire. You can also nominate your spouse for the same. It is an essential product in your investment portfolio. A fixed monthly income ensures high liquidity and makes you self-reliant.


You need to invest in a term plan as well as Medical Insurance as early as you can. A term plan will provide for your family in your absence and will allow them to continue their lifestyle without having to struggle financially. The sooner you buy it the better, because you can enjoy a higher coverage amount at a low premium. You should also invest in a Medical Insurance plan to cover any costs incurred due to illness or hospitalisation.

You can read more on Life Insurance and retirement here.

If you have not started saving for retirement, it is high time you began. HDFC Bank offers various retirement plans and a simple and convenient way of investing in these products.  You can manage your investments online and see them grow manifold by the time you retire. Many people are financially secure when they are employed but what they forget is that the financial security will not last for ever unless some practical investment decisions are made in time.

* The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action.