What is truly a dream retirement? Is it just a safe and secure future or more than that? Just imagine yourself in your 60's, enjoying a morning tea with your loved ones in the garden of your house, enjoying the morning weather and the chirping of birds. It is a dream for most working individuals to plan a tension free retirement. Wouldn't it be great if you and your loved ones can lead a post retirement life without any liabilities or stress, or plan out a vacation with your friends and family to a location that you had always dreamt of?
Post retirement life, though, comes with many constraints, especially those related to your finances as you don't have the luxury of having a fixed salary every month. Although you will receive a pension, but most of the times it's not sufficient to take care of your dreams and essential requirements. In India, most working people rely on certain limited options that are being provided by their employer for retirement planning. However, relying solely on few limited options is not prudent as they will not be able to keep pace with your growing expenses in your old age. Therefore, it is advised that you start you retirement planning at an early age so that by the time you retire, you do not have to worry about finances among other things. There are a number of investment options available in the market that will make your post retirement life easier.
Apart from traditional plans such as PF, gratuity, pension plans etc., there are many other investment tools that are specially designed for senior citizens that carry no risk.
During the post retirement life, income stops, but expenses keep on rising. Saving cash to meet such expenses is not a good idea as we know how the inflation erodes your hard earned money. It is true that most of us would not be able to earn throughout the life, but there is no denying the fact that we all need money all through our lives to sustain our living standards. It is vital to set down a regular source of income that can provide the required funds during post retirement life as well. There are several options that can assist us in the same. A few of the investment options for retirees are:
Post Office Monthly Income Scheme
It is safe, simple and secure way to receive monthly income for enjoying post retirement life. Under this option, retirees can invest their lump sum retirement benefit through which they can earn an interest as high as 8.4%. There will be no default risk on their money. The best thing about this plan is that it pays interest on a monthly basis that is vital during the retirement years.
Source – Jagoinvestor
If you want to earn a decent capital with an investment option, then you must look for the Post Office Monthly Income Scheme (POMIS) that will surely fulfill all your needs. Under this investment plan you will reap many benefits-
- Minimum investment of Rs.1500/
- A single account can hold a maximum amount up to Rs. 4.50 lakhs
- The interest rate will be 8.5% per annum payable monthly
- Get a facility of premature closure of account after 1 year
- Tax Deduction at Source (TDS) is not applicable.
- This scheme provides minors with a separate limit of investment of Rs. 3 lakhs
- It also offers the auto credit facility of monthly interest to saving account if both accounts are at the same post office.
It is clear that if you are a senior citizen or want to invest in a secure post retirement life, then POMIS is one of the best investment options for you.
SCSS (Senior Citizen Saving Scheme)
Any person aged 60 years can take advantage of this policy. Under this you can open a joint account with your spouse only. If you invest under this insurance policy, then you will be able to get advantage of tax benefits under Sec 80C of the income tax. This investment option also provides a high rate of interest at the rate of 9.20% per annum with quarterly interest pay-out. Under this investment option, premature closure is allowed. It is one of the best investment options for senior citizens for safe and secure retirement. Invest in MIS / SCSS and transfer interest into RD account through SB account through written request and earn a combined interest of 10.5 % (approx.).
- A person aged 55 years or more but less than 60 years, who has retired on superannuation or in VRS, can also open an account under this investment option. They will be liable for all retirement benefits.
- Maturity period is 5 years.
• A person can run more than one account in individual capacity or jointly with spouse (husband/wife).
• Nomination facility is accessible at the time of opening and also after opening of account.
• Account can be moved from one post office to another
• Any number of accounts can be opened in the post office subject to greatest investment limit by adding balance in all accounts.
NSC (National Saving Certificate)
People in their evolution phase can buy National Savings Certificates (NSCs) every month for Five years, reinvest on maturity and relax on retirement. It also offers monthly pension as the NSC matures.
National Savings Certificates, commonly known as NSC, is an Indian Government Savings Bond, mostly used for small savings and income tax saving investments in India. It is part of the postal savings system of Indian Postal Service (India Post). You can purchase this form of investment from any post office in India. These are provided for five and ten year maturity period and can be pledged to banks as security for availing loans. The holder gets the tax benefit under Section 80C of Income Tax Act, 1961.
- No highest limit for investment.
- No Tax deduction at source.
- Certificates can be kept as collateral security to get loan from banks.
- Rate of interest 8.50%.
- Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012 shall be INR. 151.62 After 5 years.
- Deposits qualify for tax rebate under Sec. 80C of IT Act.
- The interest accruing annually, but considered to be reinvested under Section 80C of IT Act.
Bank Fixed Deposit
Basically, fixed deposit is a financial instrument that allows money to be deposited with banks for a fixed time period starting from from 15 days to 5 years and can be more than it. It provides a higher rate of interest than conventional savings account. Under this form of investment, at the time of maturity the investor receives a return that would be equal to the principal plus the interest gained over the time period of the fixed deposit.
Senior citizens who go for a fixed deposit scheme are sometimes allowed an additional 0.5% on top of the regular return on offer. Deposits for 5 years or longer qualify for a tax benefit u/s 80C of IT Act, 1961.
-Offers guaranteed income, high returns and much more
-Flexible in nature that encourage the savings habit.
– Wide range of tenures starting from7 days to 10 years that suit your investment plan
-Partial withdrawal is permitted.
-Safe and secure way to invest
-Liable for automatic renewal
-Loan facility is also available upto 90% of principal and accrued interest.
Reverse Mortgage
A reverse mortgage is also very popular by the name of home equity conversion mortgage (HECM). Basically, it is a special type of home loan for older homeowners that need monthly mortgage payments. Under the same, borrowers are responsible for property taxes and homeowner's insurance. It permits elder to access the home equity they have created in their homes now, and defer payment of the loan until they die, sell, or move out of the home.
As there is no need of mortgage payments on a reverse mortgage, the interest is added to the loan balance every month. The increasing loan balance can finally grow to go beyond the value of the home, mainly in times of declining home values or if the borrower continues to live in the home for several years. Under this, the retired personnel who could not attain many assets for themselves besides a house, can liquidate the value of the house and survive during their retirement period.
Reverse mortgage rates can be fixed or floating and therefore will differ according to market situation depending on the interest rate rule chosen by the borrower. Any house owner of 60 years of age is eligible for a reverse mortgage.
- The maximum period of assets mortgage is 20 years with a bank or HFC (housing finance company).
- The borrower can choose for a monthly, quarterly, annual or lump sum payments at any point, as per his discretion.
- The amount received through a reverse mortgage is measured as loan and not income.
So now that you know about some of the best investment options for your retirement, you should start investing in them without delaying matters further. The sooner you start the better outcome you will have for your retirement needs.
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