Retirement does not imply the end of steady income; if the investment choices are sound, the senior citizens will earn regular returns while securing their savings. Here are some of the best schemes for retirees that offer fixed income, tax concessions, and long-term financial security.
Senior Citizens Savings Scheme (SCSS) – High Interest with Tax Benefits
If you are over 60, and you need a safe investment option that pays regular interest income, this Senior Citizens Savings Scheme is your answer. The scheme is especially for senior citizens and will offer definite interest, payable every quarter on March 31, June 30, September 30, and December 31.
It has a lock-in period of five years within which the scheme can be extended for another three years if needed. The minimum amount required to invest in this scheme is ₹1,000 and the maximum limit is ₹30 lakh. Additionally, this account can be opened either singly or jointly with one’s spouse.
One of the biggest advantages of this scheme is that it also qualifies for a tax benefit under Section 80C of the Income Tax Act. Hence, this would be a wonderful choice for retirees as it would bring both high-interest returns as well as tax savings.
Post Office Monthly Income Scheme (POMIS) – Fixed Monthly Income
This is another good bet among senior citizens. This is great for anyone who would like to have a fixed income every month after retirement. The investment period for POMIS is 5 years, so it can be considered more of a short-to-medium-term investment option.
The minimum deposit required to open an account is ₹1,500. Up to ₹9 lakh can be invested in a single account, while this limit goes up to ₹15 lakh for joint holders investing in the joint account. Income interest is disbursed every month so you can get guaranteed and reliable income.
However, it must be remembered that investments in POMIS do not yield tax benefits and tax is applied completely on the interest credited. Fixed Deposit (FD)-Guaranteed but Flexible Returns Thus, fixed deposits (FDs) have been the safest and most popular investment options for seniors. Mostly all banks have an extra interest offer of approximately 0.50% for such senior citizen FDs, hence perfect for safe yet predictable returns.
Fixed deposits are also most flexible in choosing definite time periods. You can go for a short-term deposit or a long-term deposit according to your financial needs. However, banks also provide a variety of interest payout options, so you can rely on receiving your returns at the end of the month, quarter, half-year, or annually.
Some investors can employ a tactic known as ”FD laddering” to maximize their liquidity and returns. The idea is to avoid locking all the money in a single FD and to use a spread between multiple FDs with different maturity dates; thus, cash flows will be assured, and at the same time, reinvestment risks are reduced.
Which Investment Should You Choose?
The best investment would depend on the person’s specific financial needs. If your concern is tax benefits and returns expected are high, SCSS would be the best answer. If fixed monthly income suits your need, the Post Office Monthly Income Scheme (POMIS) is just the solution. If you want complete flexibility along with guaranteed returns, an FD will be your best investment.
Diversifying these schemes will be probably the best investment in retirement. It will ensure a more robust stable income, have tax benefits, and financially secure you throughout your golden years.