Investment Options for Senior Citizens

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 can meet your expenses comfortably and still have some money stashed away for emergencies?

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These are the following investment plans for senior citizens.

  1. 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 7.40% per annum on deposits (should be in multiples of Rs.1,000). 

    On maturity, the tenure can be extended to another three years. The maximum amount that can be invested is Rs.15 lakh both 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 one year but with penalties.

  2. Monthly Income Scheme (MIS) in Post Office for Senior Citizen:

    It is a 5-year scheme offering a monthly interest of 6.6%. The minimum and maximum investment limit is Rs.1,000 and Rs.4.5 lakhs, respectively. The account can be opened jointly up to 3 adults, provided the maximum investment limit is not more than Rs.9 lakh. A depositor can hold multiple accounts but the total invested amount should not be more than the prescribed limit.

  3. Equity Linked Savings Scheme (ELSS) for Senior Citizen:

    Equity Linked Savings Scheme or ELSS Funds are open-ended Equity Mutual Funds that help you save and provide an opportunity to grow money. When almost all equity funds restrain you from paying long-term capital gains tax of 10.4% up to an amount of Rs.1 lakh, ELSS mutual funds offer tax benefits. That is why these mutual funds are also known as tax-saving mutual fund schemes. By investing in ELSS, you can save tax up to Rs.1.5 lakh as per Section 80C of the IT (Income Tax) Act.

  4. Bank Fixed Deposits for Senior Citizen:

    One of the safest options when it comes to investment, Fixed Deposits relatively offer higher interest when compared to most saving investments. The Rate of Interest (ROI) varies from one lender to another.

    For instance, DBS Bank offers Fixed Deposit rates ranging from 2.50% to 5.50% per annum for senior citizens, which is one of the best rates offered in the FD market. 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:

    • The interest rates are revised every year and

    • 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.

  5. 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.1,000, while, there is no maximum limit. The deposits qualify for tax rebates under Section 80C of the Income Tax Act. It is a 5-year scheme where there is no limit on the number of accounts that an investor can hold in NSC. The account can be opened by a single adult, jointly up to 3 adults, a minor above the age of 10 years, or a guardian on behalf of the minor.

  6. Reverse Mortgage for Senior Citizen:

    You can pledge your house as collateral with a bank and opt for a monthly payout in line with the value of the house in 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.

Past 5 Year annualised returns as on 01-06-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.

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