5 Investment Options for The Retired

Planning for retirement is as crucial as planning your child or planning for the next meal of the day. It is basically very important! Retirement means the end of earning period and enjoying the hard work and smart work you did in your youth. A retirement plan offers you financial security at the age where all you want to do is sit back and relax. To live a carefree life with no financial burdens, retirement planning is very important.

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Disclaimer: ##Rs 60,000 are the monthly pension amounts at the assumed rate of return of 8% p.a. and 4% p.a. for unit linked insurance plans. This is an illustrative example and the returns are not guaranteed & dependent on the policy term and premium term availed along with the other variable factors. The market linked return of 60K per month is for an 18 year old investing 6k per month for 20 years in a whole life policy having policy term 82 years in which Systematic partial withdrawals start at the age of 65 years at 5% rate of withdrawal per year. The investment risk in the policy is borne by the policyholder. All Plans listed here are of insurance companies’ funds. *Tax benefits and savings are subject to changes in tax laws. All Plans listed here are of insurance companies’ funds. Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

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This article will guide you through 5 best investment options for the retired, its benefits, features, and much more.

Senior Citizen Savings Scheme

Senior citizen savings scheme is a fully Government-sponsored savings option. It is specifically designed keeping in mind the senior citizens of India and provides them financial security and stability after retirement.

Under the Senior Citizen Savings Scheme, regular income is offered to Indian residents aged 60 years and above even if they have retired. Generally, the deposits are invested for a period of 5 years but it can also extend to an additional period of 3 years depending upon the policyholder.

The main focus of Senior Citizen Savings Scheme is to mobilize small savings into regular returns. Investments and tax benefits are also included along with regular returns.

Senior Citizen Saving Scheme - Eligibility

The eligibility criteria for Senior Citizen Saving Scheme is as follows:

When the age of an Indian citizen is 60 years or above

One can benefit under the SCSS if the age of the policyholder is between 55-60 years, provided the senior citizen is retired under the category of VRS. Within one month of enjoying the benefits of retirement, the SCSS account should be in existence. The policyholder should keep in mind that invested amount can never exceed the amount of the retirement benefits.

In case of a joint account, the eligibility is determined based on the age criteria of the primary policyholder as mentioned above. There are no age restrictions when it comes to the secondary policyholder.

Pradhan Mantri Vaya Vandana Yojana

Pradhan Mantri Vaya Vandana Yojana is a non-linked, non-participating pension plan launched by the Indian Government for senior citizens of India. The PMVVY scheme includes pension rates and an extended period of sale of the policy. The PMVVY (Pradhan Mantri Vaya Vandana Yojana) scheme offers loan facility as well. The interest on the loan shall be recovered from amount of pension that is payable under this plan.

Interest rates applicable on the amount are completely based on the options that are approved by the IRDAI.

Eligibility under Pradhan Mantri Vaya Vandana Yojana

Following eligibility criteria needs to be considered while purchasing the Pradhan Mantri Vaya Vandana Yojana:

Parameters	Details
Policy Tenure	10 years
Premium Paying Term	10 years
Premium Paying Mode	Yearly, Semi-Annually, Quarterly, and Monthly.
Entry Age	60 years
Age of Maturity	After the entry, age shall be 70 to 10 years
Grace Period	30 days
Sum Assured	A maximum pension of 1,11,000 can be availed
Liquidity	The loan can be availed under this plan

Fixed Deposits (FDs)

Fixed Deposits are always a popular choice, be it for NRIs, retirees, or young generation. Because of its fixed, regular income along with safety, Fixed Deposits are always considered on the top while planning to invest.

Banks generally offer a higher interest rates on Fixed Deposits for retirees than other account holders. Financial year income up to 50,000 is completely tax-free for senior citizens under Section 80TTB of the Income Tax Act. Flexibility in terms of tenure makes Fixed Deposit a favorite among retirees.

Those planning to save tax along with investment should definitely go for bank Fixed Deposits.

Mutual Funds

One of the most popular investment options these days, mutual funds refer to a pool of accumulated sums by various investors. Mutual funds are the lucrative option of investment for retirees who want to multiply their savings and create a financial cushion in the long term. They offer the retirees a great way to diversify their portfolios.

Depending upon the risk appetite, a retiree should allocate a percentage of their savings in equity funds, or debt funds, or both. A retiree is advised to keep their hands more in debt funds because of their easy liquidity in the future.

Immediate Annuity

As the name suggests, a pension is provided immediately under the immediate annuity. Based on the lump-sum amount paid by the policyholder, pension is provided immediately. Under Income Tax Act, 1961, premiums paid are tax-exempted. The annuity currently is around 5-6% per annum and is completely taxable.

There are different pension scheme options available and one can be bought by paying one-time payments as well as paying regular premium payments.

It is always advised to diversify the portfolio across different investment options rather than investing in one scheme where you have to manage your own portfolio. Immediate annuities are considered a little risky and hence, investment should be made keeping all the possibilities in mind.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Summing It Up

Investment is a vital part in anyone’s life especially a retiree. A retiree needs to invest in the best suited investment option so that they are financially independent even after their retirement.

With all the expenses in this financially growing world, it is important to create a good corpus for your retirement.

So, choose the right investment option and invest wisely!

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.