Social Security is one of the key element of life which is very much important country like India where hardly we are getting anything name of “Social Security”. We are doing everything start from paying taxes, buying stuff for our need, spending to enjoy and goes on. Without spending money you can’t get anything. We need to work for money as money is like a fresh oxygen to breath healthy.
Importance of money has been increasing
In recent time importance of money is increasing gradually and now money is empowering our way of living. Our living and lifestyle are govern majorly by money. But other than lifestyle & living it’s more important we need money to sustain our basic living needs.
Due to modern lifestyle our basic needs has gone beyond Food, Clothing & Housing. Even to get basic needs we do not have any support other than our earnings and these earning are helping us to run the family needs.
Our way of savings
Few government schemes are there for social security but those are for very poor class people. For many of us social security is one of the major thing missing in our life that is why we Indians are good at savings as we are very well aware that this will only rescue us in case of any emergency. In India our savings in form of majorly money, gold and property. We are more focusing on gold & property rather than money.
How much we need for social security
It is very important, to secure our needs we need to create the funds for social security. In India due to inflation, the rate of interests are higher as compare to any developed country. Sometime it is advantageous to us. So we need to review our sustainability in present time and what best can be done to secure our basic social security. We have seen how much we need to save for social security in article “Check status of your social security”.
Tools which are for social security
Few are the tools are helping to built-up the required corpus for our social security. Investment in these tool helps us to secure and create corpus to sustain our monthly expenses in any unexpected troublesome time.
These nine major tools are helping us to secure our social security.
(1) Provident Fund ( PF )
PF is one of the basic social security tool which is applicable only on service/ salaried class people where the provident fund amount has automatically debited from their salaries and along with employer contribution it will get deposited to your PF account. PF amount is calculated based on the basic salary. The small contribution as PF are gradually increasing our money which is accumulating collectively as principal amount as well interest on both employee & employer deposited amount. This small contribution slowly enhancing the PF money and getting higher returns on your investment due to higher interest rate.
PF investments are almost secured as its back-up by the government. The present interest rate is 8.50% annually compounded. The interest earned on PF amount is completely tax free. This small contribution will create reasonable corpus in 10-15 years. Although PF amount can only be withdrawn after leaving the job from the organization.
(2) Public Provident fund ( PPF)
PPF is one of the reasonable social security tool which is good for service class and other than service class people like business, consultants, working class were PF facility is not available, unorganized sectors etc. A minimum amount of Rs 500/- to maximum investment of Rs 1.5 lakhs can be invested in one financial year. The interest rate is reasonable good which is reviewing by the govt. time to time. The lock-in-period is 15 years which can be further extended in 5 year block periods.
PPF investments are almost secured as its back-up by the government. The present interest rate is 7.1% annually compounded. The interest earned on PPF amount is completely tax free. Small contribution in PPF can create reasonable amount of corpus long terms like in 15-20-25 years. Although PPF amount can only be withdrawn after 15 years due to lock in period.
Savings in PPF account cannot be utilized in case of emergency as due to lock-in-period the money can’t be withdrawn. For long term social security it is good tool.
The gratuity is applicable only on service/ salaried class people where at the time of leaving job you will get lump-sum amounts. The basic condition of entitlement of gratuity is the person should completed at least 5 years of service in particular organization. The gratuity amount is calculated based on the basic salary.
Gratuity can only be withdrawn after leaving the job from the organization and after completion of 5 years of service. This will help in case if someone loose job after completion of 5 years of service in particular organization.
(4) Life Insurance
Life insurance is very essential for socially secure your family. It’s kind of social cover of your family. Life insurance of all family members are not essential. It should be of head of the family who is key earning member. Most of the organization is covering their employee under life insurance schemes. If it’s not covered then life insurance policy can be taken from life insurance companies. While purchasing the policy, the coverage amount should be such which can able to cover social security of your family.
(5) Health Insurance
Medication of major illness or hospitalization both can eat our hard earn money during illness. The cost of treatment at hospitals are increasing at faster pace and getting treated at hospital is becoming costly like you are going into star hotel. Hence it’s very important that such kind of unforeseen burden can be covered. Many health insurance policies are providing such coverage by paying premium every year. These polices are covering major expenses of hospitalization during illness. The health policy should be like which should be cashless so in case of emergency we don’t need money. While purchasing the policy we will get option of low and high premium policy so selection of policy is very important. If should be fully cashless and should cover as much deceases.
Most of the service / salaried class people and their families are covered with company provided polices. If not covered then we can buy the policies directly from the insurance companies.
House is the back bone of social security. House is the basic amenity which needed by everyone. One should have at least one house either purchase by self or gifted by parent or by others. It will be the shelter I case of stoppage of income. House comes under very basic security so one should have house anywhere in country either of low or higher budget.
(7) Cash Money
This is one of the top tool for social security. To fulfill any of our basic need, we need money so the required daily expense can be taken care off. If we are investing our saved money for social security it is very important that the money can be easily accessible. Saving and investing money in any investment plan where it can be withdraw any time is the best way to cover our social security.
In country like India where gold is known as one of the good tool for social security. In case of any emergency the gold can be converted into cash currency. Almost all the families are having gold either gifted by their ancestor or purchased by self. Now a days gold investment are reasonable secured as compare to olden time as now a days we can check the purity of gold either by hallmark sign or by testing machines.
(9) Passive Income sources
Passive income sources are one of the best tools for social security. In our country we are grown up with the culture where we learnt that only hard work will paid off. But if we work smartly we also can earn more money with less effort. Now time is changing as more & more people are aware about passive income concept.
Even small-small earing can jointly made good monthly income. Multiple source of passive income can create good monthly income. For example if we are earning average Rs 500/- per day per source from 4-5 sources then this will gives us monthly income of 60k-75k. So if we create passive income stream then it can create regular monthly income stream. These passive income sources can be like rental earning, interest on your money, selling goods, training/ tuition classes, selling goods online, commission based work like selling LIC policy/ real estate broking, royally based works etc. These passive income source can create good income with less effort. Other than your job/ regular work, this will support when earning will stop from main earning sources.
All mentioned social security tools are good to ensure our social security. If we smartly work to achieve goal of social security then we and our family will be well protected and we can able to live stress-free and peacefully.