It is often foretold that life is unpredictable. Your life after retirement shouldn’t be dependent on its predicament but your self-reliance. Retirement might mean the end of your earnings period but it doesn’t mean the end of expenditures.
In fact, retirement is seen as an extended vacation and retirees look forward to having a relaxed life wherein you don’t need to follow a fixed 9-to-5 timetable. However, the savings/investments must outlast the personal needs while taking care of their family needs as well. The solution is smart financial planning not just before but after the retirement as well.
Before retirement, one can choose to invest in schemes with varied risks for the best return possible. But the retirement corpus must be kept safe in a risk-free zone. The post-retirement investment needs to strike a balance between safety, growth and income to achieve both physical and emotional stability. Retired people have two major financial needs – a steady income and safety of capital.
So, here are a couple of investment avenues one can consider post-retirement:
- Bank Fixed Deposit (FD)
Besides the safety from the market fluctuations and guaranteed returns, most of the banks also preferential interest rates on FDs made by senior citizens. Further, the interest can be withdrawn from FD account on a periodical basis. This can help the retirees receive periodical inflows for their regular expenditures. The budget proposal of giving a tax deduction of up to Rs. 50,000 on account of interest on FDs for senior citizens will act as a further sweetener.
- Post Office Monthly Income Scheme (PO MIS)
It offers guaranteed and consistent returns to its investors. The interest on the investment is directly transferred to the linked savings account each month. However, it is made for a fixed duration of 5 years. The current interest rates payable on PO MIS is 7.50% per annum payable on monthly basis. An individual can invest a maximum of Rs. 4.50 lakh, if the account is held in single name and Rs. 9 lakh, if the account is held in joint names.
- Senior Citizen Savings Scheme (SCSS)
This is one of the small savings schemes promoted in the interest of senior citizens by the Govt. of India and can be availed at post offices. One can invest a maximum of Rs.15 lakh in a single account. However, one may operate more than one account in an individual capacity or jointly with a spouse (husband/wife). The current interest rates notified in respect of SCSS is 8.40% per annum payable on quarterly basis. The account is opened for a period of 5 years.
- Pension Plan – Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Every retirement portfolio must include a pension plan. Solely operated by the Life Insurance Corporation of India, PMVVY is open for purchase/ investment until 3rd May 2018 and the minimum entry age is 60 years. During the policy term of 10 years, investor/pensioner can receive a pension as per preference – monthly/quarterly/half-yearly/yearly. Further, loan facility is also provided after completion of three policy years. Besides receiving the monthly pension as per the plan, the pensioner also receives the amount invested and final installment at the end of the policy term.
The investment decision post-retirement should involve the foresight of inflation rate and taxes. Make an informed decision and have a happy post-retirement life.