Retirement Planning: 5 investment options for senior citizens to earn monthly income

There are some initiatives that provide funds in a lump sum, however, opting for the schemes that offer funds periodically is way better as it ensures a consistent source of income.

Senior citizens can choose to invest in SCSS to earn regular income in the form of interest.

The importance of financial security is known to all. People, nowadays, are concerned about their life post-retirement. Therefore, people have started investing in tailored schemes and other options that provide a reliable source of income after retirement. There are some initiatives that provide funds in a lump sum, however, opting for the schemes that offer funds periodically is way better as it ensures a consistent source of income.

Top 5 investment options for senior citizens to earn monthly income

Senior Citizens' Savings Scheme (SCSS): Senior citizens aged 60 and above can choose to invest in this scheme to earn regular income in the form of interest. The interest would be payable on a quarterly basis and the lock-in period for this scheme is just five years, which is less than other potential investment options. Moreover, premature withdrawal is allowed but it comes with a penalty. The minimum deposit is Rs. 1,000 and the deposit should be made in multiples of 1,000 while the upper limit is set at Rs. 30 lakhs.

Bank Fixed Deposits: Senior citizens are generally entitled to a 0.50% interest rate for Bank FDs, therefore, it can be a safe and reliable source of income for them. They can invest some of their savings and opt for monthly returns to ensure monthly earnings.

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Guaranteed Income Plan: Under this insurance scheme, one is entitled to a fixed payout at set intervals after the maturity of the policy. The policy tenure ranges from 10 years to 30 years and can be a good source for monthly earnings after retirement. However, one has to ensure that all premiums are paid before maturity as they wouldn't be entitled to any returns if they fail to do so.

RBI Floating Rate Savings Bonds: The rate of interest for RBI's savings bonds is based on the National Savings Certificate (NSC), a small savings scheme. The RBI floating rate savings bonds witness a spread of 0.35% above the interest rate of NSC. Therefore, every change in the NSC interest rates would impact RBI floating savings bonds' rates.

These bonds have a fixed maturity tenure of seven years and allow premature withdrawal for people aged over 60 years, which can be an appealing feature for senior citizens. Moreover, the interest earned on them is paid on a half-yearly basis on January 1 and July 1 each year.

Mutual Funds: After retirement, equity-backed investments can prove to be a game-changer as they offer lucrative returns compared to other investment options. Since income from these sources, such as interests and dividends, would be affected by inflation even during the retirement years, you might get good returns with each passing year while other investment options would continue providing a fixed return irrespective of inflation. However, mutual funds are subject to market volatility and serve a risky avenue, therefore, a well-researched investment would be encouraged.

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