Here are a few investment schemes proven to be beneficial for senior citizens:
Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme offers an interest rate of 8% and is operated by the Indian Government. The age criteria is 60 and above, but has now been lowered down to 55 for the citizens who opt for voluntary retirement. The tenure offered is five years and the interest rates remain the same as the time of the investment. The tenure can be extended to three years more only after maturity of the first investment. The tax deduction and benefits under Section 80C are applicable, whereas the amount that is withdrawn prematurely will not be eligible for tax benefits. The interest rate for this scheme is 8.5% which keeps fluctuating every financial year and increases on a quarterly basis.
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
This scheme is also a government introduced scheme but is operated by the Life Insurance Corporation (LIC). The scheme provides the interest rate of 8%. In the 2018 budget announcement the limit of investment was increased to 15 lakhs from 7.5 lakhs. The scheme is also exempted from the tax payment which makes easier for senior citizens to avail all the benefits of the scheme. The time period of investing in this scheme has been increased to 31st March 2020 from 4th March 2018. The numbers of policies sold during the introduction of the scheme were 58,512. The benefit of senior citizen husband and wife has been made instead of the families. Therefore the husband and wife can invest together 15 lakhs each in their respective account and avail benefits of tax deduction and interest on the same.
Post Office Monthly Income Scheme or Post Office MIS
Interest rate offered by this scheme is 7.3% that can be attained monthly. This scheme comes under the schemes offered by the government of India under Posts Department. The interest is received on a monthly basis as it starts from the time of the deposit. The highest that the limit goes for investing in this scheme is 4.5 lakhs in a single account and goes up to 9 lakhs in a joint account. Time period of the maturity of the account in this scheme is five years. There is no tax deduction in this scheme.
Fixed Deposits (FD)
The tenure offered for this scheme is from 15 days, 45 days, and one year to ten years. The interest rate offered in FD’s is 4% to 7.5% which is higher than the rates offered in any other scheme. The choosing between monthly and quarterly is the cumulative time period and the non-cumulative is the final time period during maturation of account. Therefore this scheme is safe for senior citizens monthly income. The market rates do not affect the interest rates, thus even if withdrawn during the market rates fluctuation, the amount and the interest will remain the same. The smart investment plan for monthly income for senior citizens is FD’s where they get good returns and flexible premature withdrawal options. One of the main aspects that should be considered while investing in Term Deposits is that NBFCs such as Bajaj Finance will definitely offer higher interest rates and flexible terms and conditions, making the account management easier.
The systematic withdrawal plans in mutual funds provide a monthly income to the investors. A specific amount is to be decided and given for the monthly income in the systematic withdrawal plan. On a given date the amount decided will be given to the account holder. A number of mutual funds offer an option of regular payment of money but they all are not guaranteed. The returns rely heavily on the market performance and the profit is distributed from those gains. The market function and profit or loss decides the amount that can be paid to them on a monthly basis.
Health Insurance Premium
This scheme helps during medical emergencies of senior citizens claiming to be the biggest tax saving scheme. It takes care of maximum amount of the medical expenses that come with the treatment of various diseases or health issues. The tax reduction has increased from Rs. 30,000 to Rs. 50,000 under Section 80D. The additional amount of Rs. 50,000 will be deducted further from the medical bill of the very senior citizen whose bill is being paid by their children who comes under the category of senior citizen.
Therefore, senior citizens before investing in any scheme should study every scheme as per the requirements and then choose the one that matches their needs. It is highly recommended that senior citizens should definitely include Fixed Deposits in their portfolio due to their risk-free returns.