Retirement main issue is making a financial
Retirement marks a turning point in a person’s life.
Theroutine life that one has undergone for so long is set to change forever. Allthose years that you had worked to save for retirement finally arrives andmarks the end of your career, but does it? Not for everyone though someretirees choose to take their careers ina different direction. But for others? Retirementmeans focussing on getting a regular stream of income while keeping taxliability at bay. The main hurdle that most retirees face is that though theyretire at 58 or 60 the life expectancy can be stretched to 80 and above. So themain issue is making a financial planning for seniors which can ensure a fixedincome every month and pay more than your monthly expenses.
Senior CitizenFinancial Planning – A Few Important Investment Options Here are a few senior citizen financial planning options for you to explore to fulfill your monthly requirements and somemore. · Senior Citizens’ Saving Scheme (SCSS) Senior citizens must include the senior citizens saving scheme in theirinvestment portfolios. The name should give you an idea that this scheme is suitable for the senior citizens only. Availthis scheme either from the post office or the bank. The SCSS, although has a five-year tenure, it can be stretched to threeyears as the scheme matures.
8.6 percent per annum is the interest rate of SCSSwhich you can pay quarterly and it is fully taxable. You can invest as much as15 lakh and for that, you may open morethan one account. You can enjoy tax benefits too from this scheme and you canalso withdraw it prematurely.
· Bank fixed deposits (FDs) most retirees stick to bank fixed deposits or (FD) as they consider it safe.The safety and fixed returns go well with the retirees, and the ease ofoperation makes it a reliable avenue. However, interest rate over the last fewyears has been falling. Currently, it stands at around 7.25 percent per annum for tenures ranging from 1-10years.
Senior citizens get an extra 0.25-0.5 percentper annum, depending on the bank. Few banks offer around 7.75 percent to seniors on deposits with longertenure. · (POMIS) Account or the Post Office MonthlyIncome SchemePOMIS has an interest rate of 7.8 percent per annum and is payable monthly and you can invest as much as Rs 9 lakhjointly with your spouse or any other relative.
You won’t get any tax benefitfrom this scheme and the interest is fully taxable. If you are thinking you have to go to the post office every month no, you don’thave to, as the interest is directly transferred to the savings account of thesame post office. · Mutual funds (MFs) The chief fear among retirees is a non-earning period looming large before youfor another two decades or more and to prepare yourself for those years choose equity-backed investment schemes.
As your retirement income (through interest,dividends, etc.) is expected to be hit byinflation and that is a tough situation to be in so, prepare yourselfwell for such unforeseen situations. Research has shown that equities provide you with greater returns than any otherassets. Of course, mutual funds are subject tomarket risks and the only way you can shield yourself from that is by keepinga certain percentage into equity mutual funds (MFs) and investing in large-capand balanced funds and also dabbling in monthly income plans (MIPs). The focusof retirees should be investing in large-capbalanced funds and not go for ones which provide volatile returns such asthematic and sectoral funds. After all,to a retiree, a stable return is muchmore feasible than volatile returns.
· Tax-free bonds Tax-free bonds are not presently available in the primary market, but it can bea lucrative proposition for a retiree to invest in. Since they are mostlygovernment-backed they are less risky to invest in. Some of the government-backed institutions are as follows, PowerFinance Corporation Ltd (PFC), Indian Railway Finance Corporation Ltd (IRFC), RuralElectrification Corporation Ltd (REC) National Highways Authority of India(NHAI), Housing and Urban Development Corporation Ltd (HUDCO) and IndianRenewable Energy Development Agency, and they usually come with great safetyrating a much-required criteria by retirees.· Immediate annuities Are you retired? Then you have probably haveheard about immediate annuity schemes of life insurance companies. At 5-6percent per annum, the pension or annuity is fully taxable too. The amount used to purchase the annuity cannotbe returned back to you. You can go for immediate annuity products which offer a number of options catering to yourindividualistic needs.
One such exampleis LIC Jeevan Akshay VI, this is an immediate annuity plan where you canreceive annuity payments at 9.35% for life. However,once the investor dies, the annuitypayments stop coming for the spouse.There is another option too where the investor receives the payments at acertain rate for a stipulated time irrespective of the death of the investor.So have you started yoursenior citizen financial planning?Not yet? You need to start as soon as possible to make sure you enjoy yourpost-retirement years to the full extent! Try the above financial planning for senior citizens and let us know what workedfor you and what did not in the comments section below.