Our source of income is depleted with retirement and makes it hard to maintain the pre-retirement lifestyle, consequently affecting our savings. Therefore, it is essential to know which savings or investment instruments can help you enjoy your golden years without any financial worries.
Senior Citizen Saving Scheme
Post Office Term Deposit
|Minimum Investment||7 days||Rs 1,000||Rs 200||Rs 100||Rs 500||Rs 200|
|Maximum Investment||No upper limit||Rs 15 lakh||No upper limit||No upper limit||No upper limit||No upper limit|
|Investment Tenure||7 days-10 years||Up to 8 years||1-5 years||5-10 years||Can be both short and long term||Can be both short and long term|
|Lock-in period||Same as tenure||5 years||No lock-in||Same as tenure||3 years||3 years|
|Rate of Interest||6%-8.5% (revised every year)||9.3%||8.2%-8.5%||8.6%-8.9%||Market-linked||3%-7%(depends on the issuer)|
|Penalty on premature withdrawal||Interest rate applicable will be 1% less than the original rate. E.g:on breaking an FD of Rs 1 lakh opened @ 8.5% for 4 years will get you returns @7.5%||1%-1.5%||Interest paid will be according to the postal saving scheme and not as per the plan.||No premature withdrawal allowed||No premature withdrawal allowed||No premature withdrawal allowed|
1. Fixed Deposits:
Fixed Deposits (FDs) are considered to be the safest and reliable investment instruments. You can invest your money in an FD for as less as 7 days to as high as 10 years. But remember that the interest rate on can vary from one year to the other and the interest earned is fully taxable.
2. Senior Citizen Saving Scheme-
Operated by India Post, Senior Citizen Savings scheme is similar to a Savings Account, but here you are able to enjoy the benefit of higher interest rate of 9.3% as compared with a normal bank savings account that offers only 6-7% interest.
3. Post Office Term Deposit (POTD) Scheme-
If looking for a short-term saving scheme, POTD is the best option with a tenure of 1 to 5 years. Here, the interest is compounded quarterly though paid annually.
4. National Savings Certificate-
Another safest investment for senior citizens is National Savings Certificate (NSC). It is issued by post offices across India and generally applied for 5 or 10 years.
5. Equity-linked Savings Scheme-
Equity-linked Savings Scheme (ELSS) offers a flexible amount and tenure of investment. And, it does not require you to pay taxes on the maturity amount or if withdrawing the investment after completing the lock-in period of 3 years.
6. Pension Plans-
An individual should essentially have one pension plan in addition the other investment options to have a regular source of income after retirement. Pension plans are available for people up to the age of 80 years. Investment in a pension plan can be performed in two ways. One, by depositing a lump sum amount and later receiving the money as monthly payouts inclusive of interest earned; secondly, by depositing money quarterly that will be provided either as lump sum or monthly, depending on your choice.
It is advised to have a diversified investment portfolio for safe and better returns instead of putting all your money in savings account of single investment tool and suffer a loss. For retirement planning, be sure of investing in schemes offering long-term stability and aggressive products that offer high returns on investment.