The Buyt Desk
People retire from active jobs between the age of 50 to 60 years while life expectancy has risen to 80-90 years. This makes it essential that one must plan for their post-retirement expenses as you will be living for a longer time. If you are salaried you will receive a good amount of retirement corpus in the form of gratuity. You must ensure to invest your money in a way that will help you in generating a stream of passive income for you. Your retirement portfolio can possess some fixed income investment, some exposure to equity and a few government schemes that will help you in saving taxes.
Let’s look at some of the safer investment options for retirees-
Bank Fixed Deposit
Bank Fixed Deposit is one of the oldest ways of investment. Though the interest rate of FDs has seen a sharp decline still it is considered to be a safe and secure investment with a guaranteed return. The interest on FD at the present is somewhere around 4 to 7.5%. Ensure that you choose a recognised bank for parking your money and do not get mesmerised by slightly higher returns of not so known cooperative banks or other financial institutions.
Senior Citizen Saving Scheme
Anyone above the age of 60 can invest in a Senior Citizen Saving Scheme. The investor could deposit his/her money in SCSS through a bank and as well as in post offices. The tenure of SCSS is 5 years that can be extended by a block of 3 years after the scheme matures. It gives you interest on your deposit and currently, it is 7.4%per annum. This scheme specifically encourages retirees to invest their retirement corpus within three months of receiving it. The deposit in an SCSS account enjoys a tax deduction of up to Rs.1.5 lakhs under Section 80C of the Income Tax Act. TDS applies to the interest earned every quarter under the senior citizen saving scheme if greater than Rs.50, 000. To prevent TDS deduction if your income is non-taxable, fill the form 15H and submit it to the bank.
PM Vyay Vandana Yojna
It is a pension and retirement scheme operated by the Life Insurance Corporation Of India (LIC). The applicant must be 60 years of age and he/she will have to take this policy for the term of ten years. The minimum corpus for policy purchase is Rs 1.5 Lakh which will offer a monthly pension of Rs. 1000. The maximum corpus an applicant could invest is Rs 15 Lakh, which will offer a monthly pension of ten thousand rupees (Rs. 10,000). It provides the assured return at the interest rate of 7.40 per cent per annum for ten years. PM Vya Vandana Yojna offers a fixed amount as a pension, every month, quarter, half-yearly and yearly as chosen by the applicant.
Monthly income scheme (MIS)
The Monthly Income Scheme can be opened only in the post office. This scheme enables you to get a monthly income from your investment. You deposit a specific amount in MIS and the scheme in return gives the interest back to the investor. The upper limit that you can contribute in MIS individually is Rs 4.5 lakh but if the account is held jointly hen you can invest up to Rs 9 lakh during five years. The interest rate for the quarter ending 30 September 2021 is 6.6% per annum, payable monthly.
Equities
Putting a portion of your money in equity-based products is very important. Equity investment helps you generate inflation-adjusted returns as compared to any other investments. You can always choose a plan which helps you to withdraw a certain portion of your money through the Systematic Withdrawal Plan (SWP). For someone in his/her, 50’s or 60’s wanting to invest in equities can opt for hybrid funds which give a mix of equity and debt both. This will give a good diversification to your portfolio.
