Senior Citizen Savings Schemes: Top 5 money making options after retirement

Senior Citizen Savings Schemes: It's okay if you are not working after retirement but it's not all right if your money is not working. Keep your money at work when you are not working.

Most senior citizens have no earnings after retirement. The most important thing for a senior citizen is to maximize return on investment. Photo: Reuters

Senior Citizen Savings Schemes: It's okay if you are not working after retirement but it's not all right if your money is not working. So, keep your money at work when you are not working. This works well for the retired population as they are potentially not able to work physically, but while achieving the senior citizen status, they have earned enough experience that helps them grow more money from their previous savings. It is important to know that Senior Citizen must continue to earn post-retirement.

Speaking on the Senior Citizen Savings, CS Sudheer, Founder and CEO at IndianMoney.com said, "Most senior citizens have no earnings after retirement. The most important thing for a senior citizen is to maximize return on investment." Asked about the top 5 popular investment schemes for senior citizens, Sudheer listed out the following senior citizen saving options:

1] Senior Citizens Savings Scheme: Senior Citizens Savings Scheme or SCSS is a government-backed savings scheme; offered to senior citizens, aged 60 years and above. SCSS offers an interest rate of 8.6% for the July to September 2019 quarter. This is one of the highest interest rates among small saving schemes in India.

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"You can invest a minimum of Rs 1,000 to a maximum of Rs 15 lakhs in the SCSS. These schemes have a maximum tenure of 5 years with the option of extending the account for an additional 3 years. The deposits in SCSS have compounded annually with quarterly interest payouts. SCSS offers a tax deduction under Section 80C, up to Rs 1.5 Lakhs a year," said Sudheer.

2] Post Office Monthly Income Scheme: The post office monthly income scheme or POMIS is a Government-backed small savings scheme. POMIS helps senior citizens save a specific amount each month.

"Senior citizens can open POMIS accounts and deposit a maximum of Rs 4.5 Lakhs or Rs 9 Lakhs through a joint account. POMIS offers an interest rate of 7.6%. POMIS offers what senior citizens seek, it keeps the money safe. POMIS has a lock-in of 5 years and offers higher interest than FDs. The post office credits proceeds, directly to the senior citizen's post office account, which reduces hassles," said Sudheer.

3] Senior Citizen Fixed Deposit: Banks offer a higher interest rate on FDs to senior citizens. This could be 0.25% to 0.75% higher than those offered to other individuals. Loans are available against senior citizen FDs. The tenure ranges from 1 to 10 years.
Senior citizens can choose to receive regular interest payouts to meet expenses. Senior citizen FDs offer tax benefits under Section 80C up to Rs 1.5 Lakhs a year.

4] Tax-free bonds: Tax-free bonds are issued by government-backed institutions like PFC, NHAI, REC, IRFC, HUDCO, NTPC which carry the highest safety ratings. The most attractive feature is tax-free interest. Tax-free bonds are an excellent investment for senior citizens to earn a fixed annual income. Senior citizens must invest in tax-free bonds, only if they are willing to stay invested for at least 10 years.

5] Immediate annuities: Senior citizens can invest in immediate annuity schemes of life insurers. You get guaranteed pension payments in exchange for a lump sum. The pension which is around 5-6% a year is entirely taxable. Immediate annuity schemes have different pension options like pension across a lifetime, after death to spouse and in some cases; return of corpus to heirs.

Senior citizens like immediate annuities as they offer guaranteed income across your entire life. The wide range of flexible payout options; protect the senior citizen and his spouse. The premiums of immediate annuity plans are tax-exempt under Section 80C.

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