Retirement Planning: 5 investment schemes that provide monthly pension to senior citizens

Senior citizens look for retirement options that can give them a fixed income every month. It makes them financially independent and helps them achieve financial freedom. To get that income, they prefer guaranteed return schemes, but they also dabble in market-linked investment options. There are many options where they can get a monthly income with small investments. In some of the options, they can also get an income tax exemption on deposits. Know about 5 such monthly pension schemes.

Senior Citizens Savings Scheme Account (SCSS)

The post office scheme provides an interest rate of 8.20% per annum.

One can make a one-time minimum deposit in multiples of Rs 1,000 with the maximum not exceeding Rs 30 lakh.

One gets income for five years in the form of interest.

The lock-in period in the scheme is 5 years, and the deposits are eligible for a tax exemption of up to Rs 1.50 lakh under Section 80C of the Income Tax Act.

Atal Pension Yojana

Centered around senior citizens, the scheme provides monthly income between Rs 1,000 and Rs 5,000 after 60 years of age.

The monthly income one gets after 60 depends on the investment.

Citizens between the ages of 18 and 40 can apply for the scheme.

Post Office Monthly Income Scheme Account (MIS)

This is a post office monthly pension scheme where one makes a lump sum investment and gets a pension for five years.

After five years, the invested amount is returned.

The scheme offers 7.4 per cent per annum interest payable monthly.

An individual can make a maximum of Rs 9 lakh investment, while a couple can make a maximum of Rs 15 lakh investment.

An individual can get a maximum of Rs 5,550 monthly pension, while a couple can get a maximum of Rs 9,250 monthly income for five years.

SWP in mutual fund 

Mutual funds also offer monthly income through a systematic withdrawal plan (SWP).

One makes a lump sum investment in a mutual fund offering SWP.

The fund offers you a fixed monthly pension.

Since it is a market-linked programme where your funds may deplete if they fare poorly, the ideal way to keep your fund in green is to withdraw less than your average return in a year. 

Fixed deposits

Post office and banks offer fixed deposits (FDs) for different tenures.

FDs also provide monthly, quarterly, half-yearly, and yearly interest on deposits.

Along with that, the interest rate provided to senior citizens is generally 25 basis points higher than that of regular citizens.

The five-year FD also provides tax relaxation under Section 80 C.