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In today’s age of rising inflation and medical expenses, it becomes crucial that you pay more attention to your retirement planning. With a comprehensive retirement plan, you can easily save money to fund your lifestyle after your working days are over. As such, you need to find the right balance between your risk appetite and investment returns.

Your retirement savings strategy should also go beyond the traditional Employees' Provident Fund (EPF) contributions. The reason behind this is simple: EPF investments are a suboptimal means to maximise your savings. There are other products as ULIPs that offer better investment return and fund accumulation propositions.

Even if you are already investing in an EPF, it is crucial that you look to create a diversified investment portfolio for a secure financial future. 

Why Aren’t EPF Investments as Prominent as Expected?

EPF investments work as a sub-par investment instrument because of the following:

• You can only invest up to Rs. 1.5 per annum into an EPF account. Even if you compound this amount for up to, say eight years, it still would not be large enough to mitigate the effects of inflation and rupee devaluation. Without any regular source of income in your retirement years, you cannot rely on the EPF proceeds to take care of your expenses.  
• For FY 2018-19, the rate of interest for EPF is increased up to 8.65%, which may seem an attractive proposition. However, this number is rendered ineffective once you factor in the rising lifestyle costs due to inflation, accounted at 6%. As evident, you cannot expect a mere 2.65% return to be either a lucrative or a reasonable investment, especially when you don’t have any other form of savings.
• Given the fact that EPF is a long-term investment product, your invested money would be allocated to different fund options, without offering the liquidity you may need, say in the case of an emergency. Effectively, with EPF, hence, you are putting away your money, without any significant gains, and the chances are that maybe you will have to deal with budgetary constraints too at crucial moments in your life.
• While EPF plans offer tax savings, these deductions may not be as significant attractive, because EPF has no provisions for a joint account. Thus, with immense tax liability and maximum investment slabs playing their role, EPF investments may not offer the desired amount of flexibility for your co-signatory, in case they decide to invest on your behalf after you have retired.

How to Save for Retirement Then?