Four Best Investment Options for the Retired in India

Retirement might relieve you from your professional obligations but not quite from financial obligations. As you progressively age, saving enough for retirement can become a challenge. This is especially true for working professionals who are responsible for not only their spouse and children but also elderly parents.If you are also paying debts such as home loan EMIs, it may make matters worse in terms of retirement planning. Getting the right mix in terms of investment options for retirement is critical in for building a sufficient corpus.Traditionally, a retirement plan meant investing in a fixed deposit that you could encash when you would call it a day. But FD is not the only retirement tool at your disposal. A fixed-income option such as a Fixed Deposit may need a large initial investment amount. Keeping that in mind, you should actively look at other alternatives which can help you save consistently over a period of time. In fact, investing with a long term horizon helps you earn better returns and build financial discipline in the process.Investing strategically in the following retirement options can secure your retirement years with ease.

As the name suggests, the Senior Citizens Saving Scheme (SCSS) is designed specifically for retirees over the age of 60. If you’ve retired prematurely, you can also avail this option. However, you need to do so within a month of getting your retirement funds. With an interest rate of 8.6% payable quarterly, SSCS currently offers the best returns among all fixed income retirement options. The tenure is 5 years which can be further extended by three years upon maturity.Interest rates remain fixed once you invest, although they are periodically revised as per Reserve Bank of India (RBI) directives. In terms of liquidity, SCSS allows premature withdrawal. Also, tax benefits under Section 80C are applicable.

If you’re risk-averse, investing in Post Office Monthly Income may be a suitable option for you. Being government-backed, you can be assured that your life’s savings are safe. In terms of returns, you can expect your money to grow at a rate of 7.8% p.a which is paid on a monthly basis. However, interest earned is fully taxable.

If you would like to get tax saving benefits, Tax Saver Fixed Deposits are a better alternative. However, they have a fixed ‘lock-in’ or investment duration of 5 years and are the most illiquid investment option. Earning interest at around 7.25% to 7.75%, you can invest in multiple FDs of various durations and stagger interest payments so as to allow a regular monthly income.

To counter the effects of inflation, you can opt for market-linked instruments such as Mutual Funds . When investing in a flexible manner, mutual funds have no comparison. System Investment Plans (SIP) let you start with as little as Rs. 500 a month and deliver higher inflation-adjusted returns consistently.Retirement planning is a fixed financial goal so it is advised that you weigh your options carefully before investing.

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.