3 Investment Options For Retired
Updated On Jan 29, 2022
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For many, retirement marks the end of their earning time, unless they opt to continue as consultants. Making the greatest use of their retirement corpus to reduce tax burden and ensure a consistent source of income is critical for retirees. For many seniors, putting together a retirement portfolio that includes a mix of fixed income and market-linked assets remains a major difficulty. The issue is not to outlast one's retirement savings - one retires at 58 or 60, but life expectancy might be as high as 80.
As a result, before deciding on the best investment plan for elderly folks in India, it is critical for individuals to grasp the many investment options accessible to them. There are a variety of strategies that an individual may employ to keep their retirement tax burden to a bare minimum while they begin to prepare for the future and continue the cycle when the time comes to retire. To find more on investment options for the retired, read on.
Investment Options For The Retired
Following are some of the investment options for the retired -
1. Senior Citizens Savings Scheme (SCSS)
The Senior Citizens' Saving Scheme (SCSS), which is probably the first option of most retirees, is a must-have in their financial portfolios. The plan, as the name implies, is exclusively open to elderly residents or early retirees. SCSS can be applied for by anybody over the age of 60 at a post office or a bank. Early retirees can invest in SCSS as soon as they get their retirement money, as long as they do so within three months. SCSS has a five-year duration that can be extended for another three years if the scheme matures.
SCSS's current interest rate is 8.6 percent per year, payable quarterly, and fully taxable. The rates are set every quarter and are tied to G-sec rates with a 100 basis point differential. Once invested, the rates are fixed for the duration of the loan. SCSS now provides the greatest post-tax returns of any similar fixed income taxable product. The highest amount that may be invested is Rs 15 lakh, and several accounts can be registered. The money invested and the interest paid, which is as and one may create many accounts. The funds invested and the guaranteed interest payout are backed by the government.
2. Post Office Monthly Income Schemes (POMIS)
POMIS is a five-year investment with a ceiling of Rs 9 lakh for combined participation and Rs 4.5 lakh for single ownership. The interest rate is set quarterly and is now 7.8 percent per year, payable monthly. The investment in POMIS is not tax deductible, and the interest is completely taxable. Rather than travelling to the post office each month, the interest can be instantly credited to the same post office's savings account. In addition, the mandate may be provided to regularly transfer the interest from the savings account into a recurring deposit at the same post office.
3. Immediate Annuities
Retirees may also want to look into life insurance providers' instant annuity plans. The pension or annuity is presently approximately 5% to 6% each year and is completely taxed. However, there is no provision for the return of money to the investor, which means that the corpus or the sum used to purchase the annuity is non-returnable. There are around 7-10 various pension alternatives, including lifelong pension for self, after death to spouse, and post-death corpus return to heirs. Under any pension option, the corpus is not refunded to the investor. An investor who's really capable of picking and creating his own portfolio may not be a good fit for an instant annuity.
As a result, before deciding on the best investment plan for elderly folks in India, it is critical for individuals to grasp the many investment options accessible to them. There are a variety of strategies that an individual may employ to keep their retirement tax burden to a bare minimum while they begin to prepare for the future and continue the cycle when the time comes to retire.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.