5 Investment Options For Retired
Updated On Jan 07, 2022
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The years after retirement constitute an important stage in the life of every individual. Not only do you get a well-deserved break from the hustle and bustle of your professional life but you can also find time for your hobbies and spend more time with your family! However, this phase can also bring forth health problems and medical emergencies.
Whilst planning for your retirement and selecting a pension plan, it is important to ascertain the magnitude of funds you will need to be able to handle all your expenses after retirement. You can arrive at the aforementioned estimation with the help of a basic pension calculator that is available online.
5 Investment Options For Retired
Here are 5 Investment Options that a Retired Person can Benefit from
1. Annuity Plans
Annuity plans are of two types - deferred annuity and immediate annuity. In the first type of annuity plan, the policyholder needs to invest a certain amount of funds as a premium for a specific tenure as a single pay or on yearly basis which can be paid monthly, quarterly, half-yearly or yearly.
Once the premium payment term is complete, the retiree can use this amount to purchase an annuity. It is important to note that under a deferred annuity plan, one can only withdraw a third of their accumulated fund while the remaining amount can be used to buy the annuity.
2. Senior Citizen Savings Scheme (SCSS)
As the name of the scheme suggests, the Senior Citizen Savings Scheme is a retirement programme supported by the Government of India within which senior citizens or retirees can invest lump sum funds and choose to receive payouts in the form of a regular income. To enroll for the aforementioned scheme, an individual should be above 60 years of age or between 55 to 60 years of age if they have opted for the Voluntary Retirement Scheme. It is important to note that Hindu Undivided Families (HUFs) and Non-Resident Indians (NRIs) are not eligible for this scheme.
The aforementioned scheme also comes with tax benefits, which makes it easier for retired individuals to get more benefits. Furthermore, since it is backed by the government, the scheme is considered reliable. To get started with the SCSS, the retiree should have an SCSS account that pays out the benefits. One can invest any amount between ₹1,000 to ₹15 lakhs through a single payment.
2. National Pension Scheme (NPS)
The National Pension Scheme is an investment option for employees across private and public sectors, which enables them to invest in a pension account during their working years. Once they retire, they can withdraw some of the funds while the rest of the amount will be paid out as a monthly pension thereon.
While the NPS was initially introduced for Central Government employees, all Indian citizens can now invest in the scheme, which offers an interest rate of 7.4% per annum between July 01, 2021, to September 30, 2021. An NPS account can be opened at any authorized bank or a post office and is eligible for tax* benefits under section 80C of the Income Tax Act.
3. Debt-based Mutual Funds
Debt-based mutual funds with a short investment tenure of one to three years can be ideal for a retired individual as they are good for providing a regular and stable interest. However, one can also opt for long-term debt funds, which have a flexible tenure. If one chooses to invest in ultra-short-term debt funds, then they can opt for liquid funds with a maturity of 91 days or fixed maturity plans that have an investment tenure ranging from a few months to a few years.
Debt-based funds aim for returns and, therefore, invest in several types of securities to provide the retiree with decent investment returns. This is one of the reasons why most risk-averse investors such as retired individuals and senior citizens can consider investing in debt-based mutual funds. A useful tip to make the most out of this mutual fund investment is to choose high-rated securities over low-rated ones since they are prone to low volatility.
4. Guaranteed Returns Insurance Plan
Life insurance savings plans that provide guaranteed returns are one of the preferred investment options for building a corpus for your retirement. A guaranteed returns insurance plan can help you systematically plan your savings over the years, fulfill your dreams, and also manage your financial responsibilities.
A guaranteed returns insurance plan, as the name suggests, also provides the protection of an insurance cover to you and your loved ones while your savings continue to contribute to your retirement fund. The plan provides you with the flexibility of choosing limited or single premium payment terms so that you can focus better on the savings after fulfilling the premium obligations.
There are several safe and stable investment avenues available for retired individuals. Out of the investment plans discussed above, pension plans that provide higher returns, including annuity plans, are usually preferred by retirees. Furthermore, annuity pension plans have flexible provisions for payouts, investment amount, etc., while also enabling investors to choose a simple and hassle-free single premium payment.
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.