Financial planning is very crucial for senior citizens as it can potentially save money, reduce expenses and provide a substantial retirement amount. Individuals can invest in the National Savings Certificate scheme, Senior Citizen Saving Scheme and senior citizen fixed deposits to avail tax benefits.
Here are some details about the different schemes –
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National Savings Certificate
It is a fixed income investment scheme introduced by the Indian Government to encourage more investors.
The benefits of this scheme are-
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Guaranteed income
Individuals can avail returns of up to 8% per year with this scheme. It is thus a risk-free investment scheme that ensures that an individual has a growing income.
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Compounding interest
The interest on deposits in this scheme is compounded annually. It serves as a beneficial tool to increase returns.
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Easy application procedure
Individuals can invest in this scheme by submitting their KYC documents at the nearest post office.
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Senior citizen fixed deposits
A fixed deposit is a popular investment option for employees that can fetch them substantial tax benefits. It is also widely availed among various individuals in the society due to its easy application process and the tax benefits it offers.
The benefits of senior citizen fixed deposits are-
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It is risk-free
The senior citizen fixed deposit interest rate is decided at the time of the investment. It does not change with the change in market conditions.
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Flexible lock-in period
Individuals can choose a lock-in period ranging from 1 year to 5 years in case of this type of investment. However, in case of emergencies, they can withdraw the amount anytime against a nominal fee.
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It offers good returns
The rate of interest is also considerably higher than that of other schemes, making it an ideal option to invest in. The interest rates in the case of senior citizen fixed deposits are about 0.5% higher than regular ones. You can use an online fixed deposit calculator to determine the returns you are entitled to avail.
Bajaj Finance is one such financial institution that offers returns up to 8.95%. They also provide other benefits like flexible tenors, the online application process, and more.
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Senior Citizen Saving Scheme (SCSS)
It is a savings scheme specially designed for Indian citizens above the age of 60. The age limit can be relaxed to 55 years in case of voluntary retirement, superannuation and individuals applying within one month of receiving the retirement benefits. Senior citizens can open an SCSS account at any of their nearest post offices or any financial institution that offers this service.
The benefits of this SCSS scheme are-
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Ideal tool to invest after retirement
This scheme is designed to support citizens after retirement to generate extra savings. Senior citizens need to submit supporting documents along with the application form to avail of this scheme.
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It is reliable
SCSS scheme is one of the safest avenues for investment as the government backs it. The income generated from this scheme is pre-determined and does not depend on the change in market conditions.
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The option of having multiple accounts
Individuals are allowed to invest in various Senior Citizen Saving Scheme Accounts. They can also appoint a nominee or open a joint account under this scheme. The only condition is that the co-applicant must be the spouse of the principal applicant.
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Good returns
The interest rate of the SCSS scheme was set at 8.7% until March 2019. So it offers high risk-free returns on investments.
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Flexibility in duration
Individuals can invest in the SCSS scheme for up to 5 years. They have the option to further extend the period for another 3 years.
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Extensive range of investment options
The senior citizen saving scheme allows individuals a one-time investment opportunity according to their savings. They can invest up to Rs. 15 lakh, starting from Rs. 1,000 only.
Seniors can claim tax benefits under section 80C for investing in the above-mentioned schemes. Invest wisely to increase your retirement savings.
