After retirement, income halves but expenses don’t. A standard monthly pension is no longer sufficient to maintain your standard of living and beat inflation. So how should you plan your investments such that you are able to meet your expenses comfortably and still have some money stashed away for emergencies. These are the following investment options for senior citizen.
- Senior Citizen Saving Scheme (SCSS): It is a 5-year plan open for citizens aged above 60 years. The account can be opened with post offices or designated banks. It gives an assured interest rate of 9.3% per annum on deposits (should be in multiples of Rs 1,000). On maturity, the tenure can be extended to another 3 years. The maximum amount that can be invested is Rs 15 lakh both as singly and jointly with a spouse, who should be aged below 60 years. The deposits are non-transferrable and pre-mature withdrawal is allowed only after the completion of 1 year but with penalties.
- Monthly Income Scheme (MIS) in Post Office for Senior Citizen: It is a 6-year scheme offering a monthly interest of 8.4%. The minimum and maximum investment limit is Rs 1000 and Rs 3 lakhs, respectively. The account can be opened jointly by two depositors, provided the maximum investment limit is not more than Rs 6 lakh. A depositor can hold multiple accounts but the total invested amount should not be more than the prescribed limit.
- Equity Linked Savings Scheme (ELSS) for Senior Citizen: It gives you an opportunity to capitalize on the upswing in the Indian equity markets while sheltering you from the lows at the same time. Further, no tax is levied on long-term capital gains from this scheme.
- Bank Fixed Deposits for Senior Citizen: Since bank deposits are known as risk-free investments, they present a high degree of safety. For instance, Union Bank of India offers an additional 0.50% interest on deposits for senior citizens. You can park your funds in FDs that ensure a monthly stream of income. While investing in FDs, two points should be kept in the mind:-
a) the interest rates are revised every year and
b) interest earned on bank deposits is taxable.
However, due to the recent rate cuts by RBI, banks have lowered the interest rates on FD, thereby impacting their attractiveness.
- National Savings Certificates (NSCs) for Senior Citizen: Issued by Indian post offices, NSCs are used for small saving purposes. The minimum amount to be invested in an NSC is Rs 100, while, there is no maximum limit. The deposits qualify for tax rebates under Section 80C of Income Tax Act.
- Reverse Mortgage for Senior Citizen: You can pledge your house as collateral with a bank and opt for a monthly pay out in line with the value of the house as return. Technically, the bank owns the house but you can continue living in it as long as you and your spouse are alive. On your death, the bank will initiate the process to sell the house but the first offer will be made to your legal heirs. In case they are not in a position to buy the house, the property will be opened for sale to outsiders. If there is a difference in the value of the house, the excess amount will be paid to the legal heirs.
“Retirement is When You Stop Living at Work But Begin Working at Living”
Retirement is not an end, it’s just the beginning. So make sure to invest your money judiciously to continue to enjoy financial independence.
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