Retirement means the end of active working life of a person. For many, especially those without pensions, it means the end of regular monthly income. Even though they have their gratuity money, PF and a few other investments that they have made throughout their working life to rely on, but is that enough?
There is nothing wrong with wanting a better life with a regular income and greater security. They do not need to live their life worrying about the monthly household expenditure. Instead, with risk-free investment plans, they can live the rest of their life in relaxation and enjoyment. Usually, investing in a good pension plan well before the retirement age helps and prevents from exhausting the retirement funds. However, it is never too late to make amends and make a move towards a better life with these investment schemes for senior citizens.
Best Investment Schemes Available for Senior Citizens of India
1. Senior Citizens’ Saving Scheme (SCSS)
What is SCSS?
This is one of the most popular and much-preferred investment schemes for senior citizens. Clearly, this is a retirement investment plan only for senior citizens that ensure regular income to retirees. It happens to be one of the best investment plans for senior citizen because it is a risk-free tax saving investment. It is a long-term saving scheme that can be easily availed by certified banks and post offices across India.
Anyone who is above 60 years can invest in this plan. Also, people who have opted for early retirement can be a part of this scheme by applying within a month of receiving the retirement benefits. Anyone less than 55 years is not applicable to this scheme.
A maximum of 15 lakhs can be invested in the SCSS account. Since it is a government-sponsored senior citizen investment scheme it is safe and reliable. Returns are available at 8.6% rate which is considered better than the returns from savings or FD account. Nomination facility and tax deduction under Section 80C of Indian Tax act 1961 are some of the other benefits.
2. Post Office Monthly Income Scheme (POMIS) Account
What is POMIS?
This is another one of the few good investment schemes in India. Considering it is one of the many other investment plans under the purview of the finance ministry, makes it a highly safe and reliable investment plans in India only for senior citizens. This investment scheme requires the investment of a certain amount through which you can earn a fixed interest every month. It may not be completely risk-free investment schemes for senior citizens, but it involves low risk.
Anyone who is a resident Indian can avail this scheme to enjoy its benefits. NRIs are excluded from availing the benefits of this scheme. It can even be opened in the name of a minor, above 10 years of age.
These post-office schemes for senior citizens allow you to invest up to 4.5 lakhs individually and 9 lakhs jointly for the period of 5 years. The interest is credited to the savings account monthly via Electronic Clearance Service. This scheme ensures safe investments for seniors as the money is protected until the time of maturity. There are no market risks and one can reinvest after the maturity period. For those who cannot afford big investments, this scheme allows them to start small with a nominal amount of Rs 1500. Also, it is subjected to tax liability. There is no exemption on the interest earned.
3. Fixed Deposits (FDs)
What is Fixed Deposit?
This is one of the best investment options for senior citizens in India. It is also known as term deposits that ensure guaranteed returns and can be easily availed at any bank and post office. However, the rate of interest varies at every bank. An FD gives the higher rate of interest than a savings account.
FD can be created by anyone at any age. However, anyone above the age of 60 years on the day of the deposit can avail special senior citizen rate of interest.
It is one of the best investment options in India for senior citizens because they earn 0.25% to 0.75% higher interest rate as compared to the ordinary people. There is a flexibility in terms of tenure and allows reinvesting. It also manages re-investment risk and allows tax saving under the section 80C.
4. Tax-Free Bonds
What are Tax-Free Bonds?
Among others, this is one of the few good investment schemes for senior citizens. It is highly secure because these bonds are issued by organizations affiliated to Government like Indian Railway Finance Corporation, Power finance corporation Ltd. National Highway Authority of India, Rural Electrification Corporation, etc. They are particularly done to raise money for a project.
Anyone who is looking to make a long-term investment and wants to earn fixed annual interest.
This is one of the safest investment options in India for senior citizens. The interest earned every year is totally exempted from the tax deduction, but it must be included in the IT declaration. As for the interest rate, it is quite appealing because they offer a 6.5% rate to the investor. An investor must note that the rate of interest keeps fluctuating as it falls under the purview government securities.
There is a minimum to no risk in such investment because it is government sponsored. However, the investor must be ready to lock-in the money for at least 10 years until it matures.
5. Health Insurance
This is a mandatory investment not only for senior citizens but everyone. Health Insurance from any reliable bank is like a financial backup during the time of health emergency. It promises to cover the cost of medical care provided by the health care institution.
It can be availed by anyone. However, it is suggested to plan this kind of investment during the work-life years.
It offers greater tax exemption to senior citizens on the premiums paid towards the health insurance under section 80D. The tax exemption limit has been increased from Rs. 30,000 to 50,000. Also, the government has offered an increased exemption of up to Rs. 1 lakh on the treatment of critical illness.
6. Pradhan Mantri Vaya Vandana Yojana
What is PMVVY?
It is a reliable senior citizen pension scheme, recently announced by the Government of India. It is a retirement investment plan that is available only for 4 years, from 4th May 2017 to 31st March 2020. The scheme is run by Life Insurance Corporation of India (LIC) and it can be easily availed on the internet or from the LIC office.
It is the scheme announced by the government exclusively for senior citizens aged 60 years and above.
It is one of the most highly reliable and secure investment schemes for senior citizens. At an assured rate of 8% per annum, this scheme provides a monthly pension for 10 years. It is a very flexible scheme wherein the pension is paid at the end of each period, as chosen by the pensioner. It can be anything from monthly, quarterly, half-yearly or yearly. It is exempted from Goods and Service Tax (GST) completely. After 10 years, the entire purchase price and the final installment is paid to the pensioner. Also, it allows premature exit with 98% of purchase price refund. Pensioners can invest up to Rs. 15 Lakh with a minimum pension that can be availed is Rs. 1000.
These are few safe investment schemes for senior citizens. Besides, they can even invest in mutual funds, Equity-Linked Savings Scheme, and immediate annuities. Investment is of utmost importance for senior citizens for a better future.