People generally have many myths about post-retirement life. Often, people falsely believe that it isn’t possible to maintain the same lifestyle and spending habits as they had during their pre-retirement phase. However, the reality is a far cry from this. With the appropriate saving strategy, post-retirement monetary spending’s need not be limited to just bringing home the bread.

The following schemes can help an individual build a corpus which shall aid in generating a steady monthly income-

  1. National Pension Scheme (NPS)
  2. The National Pension Scheme is a government-sponsored pension programme in India. It is a voluntary, post-retirement investment fund initiated by the Central Government. The NPS offers social security in the form of pension. This scheme covers employees of all sectors, except those from the armed forces. Subscribers make voluntary contributions into their Pension Account to accumulate a post-retirement corpus, for which they receive a tax deduction under the Income Tax Act. The returns are market-linked as this scheme mobilizes money from the public and invests in a diverse range of securities like shares, bonds and bills.

  3. Post-Office Monthly Income Scheme (POMIS)
  4. The Post-Office Monthly Income Scheme is a small-savings scheme backed by the Government of India. It offers assured returns on the deposited amount and is therefore considered as a relatively safer bet. This scheme is thus preferred by risk-averse investors or pensioners looking to fulfil primary goals like covering basic monthly expenses on food and rent. The tenure of investment in this scheme is five years, and it yields an annual interest rate of 7.6%, payable monthly. It should be noted that the maximum investment amount here is Rs. 4.5 lakh for a single holder and Rs. 9 lakh for a joint holder.

  5. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
  6. The Pradhan Mantri Vaya Vandana Yojana is a pension scheme newly launched by the Government of India, exclusively for senior citizens aged 60 and above. The scheme offers an assured interest of 8% p.a., payable monthly for ten years. The pension amount ranges from Rs. 12,000 p.a. to Rs. 12,0000 p.a. is payable at regular intervals (monthly, quarterly, six-monthly, yearly) as chosen by the pensioner.

  7. Systematic Withdrawal Plan (SWP) in Mutual Funds
  8. A systematic withdrawal plan in a mutual fund allows the investor to make a lumpsum investment initially and then keep withdrawing a fixed amount at a pre-determined frequency to generate a steady flow of income. Here, the investor has complete control over the asset allocation for his investment. The investor can, at first, decide upon the proportion of equity and debt exposure, then accordingly choose a suitable mutual fund scheme and activate for the SWP option.
Thus, it is clear that there are an ample number of investment options available for individuals to earn a regular income throughout their life. Investors must first devise an investment strategy, chart out anticipated monthly expenses, understand their risk-appetite and then choose a suitable scheme that aligns with their goals.

Learn more about your Pension Plans here.

DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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