Financial planning: 7 investment options for senior citizens

Most of the financial planning is done when you are young or below 40 years of age. Ideally, post that age, the major chunk of expenses begin like child's marriage, or child's higher education, if you are planning to buy a house and so on. 

Amid these high-valued expenses, what one forgets is that age of retirement is also near. You need to plan the finances for your post retirement life and cannot be ignored. 

Generally a person retires at the age of 58 or 60 years which means that is an end of his earning period. So, it is important for an individual to built retirement corpus before that. 

Here are few options where a senior citizen can invest and continue enjoying a secured post-retirement life:

1. Senior Citizens' Saving Scheme (SCSS): Designated for individuals above the age of 60, the Saving Schemes for senior citizens in India are effective, long term saving options and offer unmatched security and features that are usually associated with any government sponsored savings program. 

These schemes are available through certified banks as well as the network post offices spread across India. The typical SCSS account extends upto five years and upon maturity can be subsequently extended for an additional three years. The depositor is allowed to make one deposit into this account, an amount that is a multiple of Rs 1,000 and not extend beyond Rs 15 lakhs. 

Presently, the scheme offers an interest rate of 8.3%. 

2. National Pension Scheme: National Pension Scheme is a contribution scheme launched by the Indian government, which offers a large variety of investment options to employees. The scheme helps individuals make decisions with regards to where they should invest their pension wealth. 

Unique Permanent Retirement Account Numbers (PRAN) are allocated to each subscriber under the NPS at the time of their joining. Subscribers are also allocated two accounts, which they can access at any time. 

NPS schemes can earn a subscriber anywhere between 12% - 14% interest, which is still on the higher side when taking other investment options into consideration.

3.  Post Office Term Deposit (POTD) Scheme: Investors are rewarded with assured returns every month on their deposit. This is one of the most beneficial investment options that can be procured as it offers returns, ensures that the capital invested is intact and also provides a fixed income every month. 

This scheme is provided by the Indian Postal Service and is administered by the Finance Ministry of India, making this one of the most secure options to invest in.

As of 1 April, 2016, the revised rate of interest applicable on the Post Office Monthly Income Scheme is 7.80% per year, and is payable monthly.

4. Systematic Withdrawal Plan and Mutual Funds: A mutual fund is a pool of savings contributed by multiple investors. The common fund so created is invested in one or many asset classes like equity, debt, liquid assets etc. 

While, an SWP is a facility that allows an investor to withdraw money from an existing mutual fund at predetermined intervals. The money withdrawn through a systematic withdrawal plan can be reinvested in another fund or retained by the investor in cash.

Under an SWP, a mutual fund will pay you a specific sum of money at times decided bu you, like each month or each quarter, etc. For this, to earn higher returns you have to start investing in mutual funds at early age. 

5. Fixed Deposits: Fixed Deposits (FDs) are considered to be the safest and reliable investment instruments. You can invest your money in an FD for as less as 7 days to as high as 10 years. But remember that the interest rate on can vary from one year to the other and the interest earned is fully taxable.

6. Pradhan Mantri Vaya Vandana Yojana (PMVVY): The scheme was available from 4th May, 2017 and it can be availed till May 3, 2018. The government had announced the pension scheme exclusively for the senior citizens aged 60 years and above. 

As per the Ministry, the Scheme will provide an assured return of 8% per annum payable monthly (equivalent to 8.30% p.a. effective) for 10 years. The pension will be payable at the end of each period, during the policy term of 10 years, as per the frequency of monthly/ quarterly/ half-yearly/ yearly as chosen by the pensioner at the time of purchase.

The Scheme can be purchased offline as well as online through Life Insurance Corporation (LIC) of India which has been given the sole privilege to operate this Scheme.

7. National Savings Certificate: The National Savings Certificate (NSC) is an investment scheme floated by the Government of India. It is a savings bond that allows subscribers to save income tax. There is no maximum limit on the purchase of NSCs, but investments of up to Rs 1.5 lakh in the scheme can earn a tax break under Section 80C of the Income Tax Act.

The certificates earn a fixed interest, which is currently at the rate of 8.1% per annum. This interest is added back to the investment and compounded annually. These certificates can also be used as collaterals while taking loans from banks.

Hence, do not worry about your investment plans post retirement as the above options will always help you to manage finances. 

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