World Senior Citizens Day falls on August 21, making it the ideal time to explore meaningful ways to give back to our elders. As they have worked hard their entire lives to ensure a happy and steady life for their loved ones, it can be a responsibility and privilege to provide a secure retirement for them. Opting for the right financial products can be the right step in that direction.
For retirement, choosing products that provide regular financial support is important. Here’s a look at some options that can serve as the best investments for senior citizens on this special day and beyond.
7 Investment Options to Secure One’s Golden Years
From fixed-income options to gold, here’s a list of what an ideal investment portfolio of a senior citizen can include:
Senior Citizens Savings Scheme (SCSS)
It is a government-backed plan that offers higher-than-average interest rates. It is ideal for individuals over the age of 60 years. It comes with a 5-year lock-in period and offers quarterly interest payouts. The scheme is safe and easy to open at a bank or post office and comes with the added advantage of tax benefits under Section 80C.**
Post Office Monthly Income Scheme (POMIS)
Perfect for senior citizens seeking monthly income schemes, POMIS pays fixed interest directly to your account. As it is a government-backed savings plan, it offers capital protection, stability, and predictable earnings. All of these are essential elements for the financial health of senior citizens.
Senior Citizen Fixed Deposits (FDs)
Banks and NBFCs offer special FDs for seniors. These FDs come with a 0.25%–0.75% interest rate higher than standard rates. They are simple, safe, and available in various tenures. You also have options to choose from among monthly, quarterly, or annual interest payouts as per your needs.
Plus, opting for tax-saver FDs (with a 5-year lock-in period) allows you to enjoy tax benefits under Section 80C. These FDs can be a part of tax-saving schemes for senior citizens.**
Mutual Funds – Debt or Hybrid Schemes
If you are looking for slightly better returns than an FD and are willing to take on low amounts of risk, consider debt mutual funds. You can even consider hybrid funds to combine the benefits of debt and equity. This will give your portfolio a small boost in growth, while still maintaining relative stability. Debt mutual funds can be one of the best investment options for senior citizens who can tolerate minor fluctuations.
Unit-Linked Insurance Plans
If you are planning to buy a life insurance policy for senior citizens, why not merge investment into the same product? ULIPs can help in that regard. They offer the dual benefits of life cover and market-linked growth. One can choose to invest in debt, equity, or hybrid funds, while being assured that the senior citizen will enjoy peace of mind when it comes to their loved ones’ future.
National Savings Certificate (NSC)
National Savings Certificate is a fixed-income savings scheme available at post offices and backed by the Government of India. It has a 5-year lock-in period and offers guaranteed returns, with interest compounded annually but paid at maturity. The investment qualifies for tax deduction under Section 80C, though the interest earned is taxable. It suits seniors who can keep funds parked for a medium term while enjoying safety and assured growth.**
Tips for Seniors to Invest Smartly
Along with choosing the right products, it is important for seniors to invest in a smart manner.
Here are some tips for the same:
- Make safety and liquidity a priority. Keep most funds in secure instruments and some in slightly higher-return options.
- Diversify your funds. Combine safe schemes such as SCSS with moderate-growth assets such as debt funds. Use a retirement calculator to plan your allocation as per the expected returns.
- Match payouts to expenses. Select monthly or quarterly income plans that match your regular bills (if you have chosen a plan for this purpose).
- Plan for tax efficiency. Opt for tax-saver FDs or life insurance for senior citizens to enjoy Section 80C benefits and reduce your tax outgo.**
- Ensure financial security for the future. Consider buying life insurance for senior citizens to create a safety net against unforeseen situations. For a fuss-free experience, a term insurance plan for senior citizens might be ideal due to its simple, accessible nature.
World Senior Citizens Day is a reminder for retirees (and others, too) to safeguard their savings while ensuring a steady income. From SCSS to FDs and life insurance plans, today’s seniors have a variety of safe, rewarding options to create a smart retirement plan. With well-intended and well-informed retirement planning, one can ensure both financial stability and peace of mind throughout their golden years.
** Tax exemptions are as per applicable tax laws from time to time.
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