Steady Investment Options For Your Safe-Retirement.
The National Health Profile published in 2019, life expectancy in India is 68.7 years. However, it is now normal to live up to 90 years and we must plan for this eventuality. What this information highlights here is the need for a steady income plan for at least more than 30 years after your retirement and of course, there are many factors to be considered like healthcare, caregivers, lifestyle needs of the elderly, and increase in the cost of living due to inflation. This may sound like a daunting prospect but with intelligent and early planning, we can secure our future.
The global economy was already facing cyclical economic issues along with on and off-trade wars and then the COVID invited itself in the global assembly to worsen the situation even further. Has this uncertainty forced you to recalculate your finances and exposed the need to have your basic financial fixtures like Life, health, and emergency funds in order to climb above on the financial freedom ladder. The job-losses, pay cuts, medical emergency, and other financial and life threats are hanging like a sword on your head and amidst all these negative instances the falling Interest rates on fixed income Investments also add up to your worry.
The lowering of interest rates of fixed-income products such as bank deposits and small savings schemes is impacting the risk-averse investors especially those who are nearing their retirement goal. As falling Interest rates on fixed instruments are reducing the potential returns, Investors are in need to look at various available Investment avenues to reduce the reinvestment risk, generate inflation-adjusted returns, and diversify their asset portfolio. This ongoing uncertainty has opened the door of financial learning that how important it is for you to fix your financial issues right away without waiting for a perfect time to come.
Generating a safe fixed monthly income is a sign of an ideal retirement portfolio for adding growth with a moderate level of risk you can even look for suitable NPS, Mutual Fund schemes, Insurances and if you want to avoid taking even moderate risk and want to stick to minimalistic then the below choices can be made:
1. Bank fixed and recurring deposits:
Senior citizens get higher interest rates than ordinary customers on bank fixed deposits and recurring deposits, typically 0.5% higher than normal rates. According to Section 80 TTB of the Income Tax Act 1961, the Interest income up to Rs 50,000 per annum is tax-free for senior citizens. This includes interest in bank FDs, bank RDs, post office FDs, post office RDs and savings account.
2. Post-office fixed, recurring deposits and Monthly Income scheme:
- This works exactly the same as bank deposits but with an added layer of safety as the money deposited in the post office directly goes to government almost easing chance of defaults.
- Post office deposits are also free from TDS deduction, unlike bank FDs/RDs.
- Investments in post office FDs (5-year tenure) are tax-deductible up to Rs 1.5 lakh however the interest on the same is taxable.
3. Senior Citizen Savings Scheme(SCSS):
It’s a government-backed savings scheme backed by the government which allows you to save a specific amount every month. Subsequently, interest is added to this investment at the applicable rate and paid out to the depositor(s) on a monthly basis.
- This scheme is specially formulated for the investors looking for a fixed monthly income-generating option but is reluctant to take any market risks.
- There is no capping on the no. of accounts that can be held by individuals but there is a limit on the maximum amount that can be cumulatively invested across all POMIS accounts.
- In the case of a sole operating account, the maximum investment allowed in this is Rs. 4.5 lakhs and In case of joint holders (up to 3 joint holders), a maximum of Rs.9 lakhs can be invested.