One of the main concerns that senior citizens and retirees have post-retirement is access to limited funds to manage all their expenses. While public sector employees might enjoy regular pensions, private sector employees have to depend on provident funds or smart investment options to have consistent fund flow for all their expenses.
Here are a few options that are ideal for investing your savings tailored for senior citizens:
Public Provident Fund (PPF)
The scheme is operated and started by the Indian Government in 1968 for all the citizens but is used for the senior citizens majorly. The interest received here is free from the income tax and the interest rates are revised and submitted by the government from time to time. The tenure of this scheme is for 15 years or can be extended every five years. The tax benefits that can be availed in this scheme also come under Section 80C of IT ACT. The interest income is not included in the Income Tax payable amount. Seeing these tax exemption benefits it is recommended for the senior citizens to invest in such schemes. The amount required to start an account for this scheme is Rs 500 and goes up till Rs. 1, 50,000. This scheme can be started from the post offices or other banks.
Fixed Deposit (FD)
Fixed Deposits offer best returns for investment and thus is chosen more by the retirees. The interest rate is 8% which is more than the Current Interest Rate offered to the general public. Tenure offered starts from three months, six months, and one year going up to ten years. The lock-in period is offered for 5 years, although during emergencies the withdrawal has been made flexible for the senior citizens. Under Section 80TTB, a senior citizen investor of 60 years of age or above is liable to claim for the deduction of amount Rs. 50,000 from the amount that they receive in the financial year. Bajaj Finance is one of the Non-Banking Financial Companies offering higher interest rates for senior citizens going up to 9%. The interest rate of fixed deposit is not dependent on the market, therefore, it is beneficial and safer for senior citizens.
National Savings Certificate (NSC)
NSC is one of the best tax saving schemes in India for senior citizens again, though was made for the others as well. It is a scheme introduced by the Government of India for the general public but is turning out to be the best for senior citizens. The scheme provides tenure for 5 years and 10 years. There is no fixed requirement of the amount to start an investment. It can begin by investing Rs. 100 as well. The interest rate changes every three months and currently the interest rate is 7.6%. The scheme is easy to purchase from any post offices by submitting the documents. Buying of NSC has no limit but after the investment of 1.5 lakhs in the scheme, the tax benefits can be availed by the senior citizen investors. These tax benefits come under Section 80C. The interest that is earned while purchasing the certificate is later added in the final amount to be eligible to enter the tax benefits criteria.
Senior Citizens Savings Scheme (SCSS)
The Senior Citizens Savings Scheme is introduced for senior citizens from the age 65 and above, and has recently included the age group from 55 and above. The age of 55 is included due to early retirement options being taken by the citizens. The amount that can be deposited in this scheme is Rs. 15 lakhs with a tenure of five years and is further can be extended till next three years upon maturity. The tax benefits are availed from the deposit time itself in the financial year under Section 80C. If the amount is withdrawn prematurely then the tax saving scheme that comes under 80C is not applicable. After the death of the depositor, the amount withdrawn prematurely is not liable under tax deduction. Whereas, when the interest is taxable if paid after the death of the depositor.
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
This scheme is also a government introduced scheme but is operated by the Life Insurance Corporation (LIC). The scheme provides an interest rate of 8%. In the 2018 budget announcement, the limit of investment was increased to 15 lakhs from 7.5 lakhs. The scheme is also exempted from the tax payment which makes easier for senior citizens to avail all the benefits of the scheme. The time period of investing in this scheme has been increased to 31st March 2020 from 4th March 2018. The benefit of senior citizen husband and wife has been made instead of the families, letting them invest up to 15 lakhs in the investment.
When it comes to senior citizens, investments that offer safer and higher returns are always more preferable. In that regard, Bajaj Finance FD for Senior Citizens could be a great addition to your retirement investment portfolio.