When planning your investments, one needs to keep several factors in mind. These include the objective for investment, the risk appetite, age, and when you want the returns.
For senior citizens, it is important to invest in schemes that make them enjoy their retirement life, without being dependent on anyone. They need to invest in policies and schemes that provide the following in the long run:
- capital security
- regular monthly income
- steady growth in wealth
There are special tax-saving opportunities that offer deductions of up to 1,50,000 under Section 80C of the Income Tax Act. The following schemes offer wealth creation or monthly income or both that work best for senior citizens. However, the choice of investment largely depends on the objective of investment.
Top Tax-Saving Investment Schemes For Senior Citizens
- Senior Citizen Fixed Deposits-
Banks offer special senior citizen FD interest rates, which is 0.5% more than the general category FD interest rates. There are options for regular payouts that can ensure a regular income stream for older people. They can even enjoy the tax benefits of up to 50,000 on the interest earned on fixed deposits of more than 5,00,000 principal amount.
- Senior Citizens Savings Scheme (SCSS)
This is a government-backed savings scheme for senior citizens wherein a maximum limit is set at Rs. 15,00,000 or the retirement corpus, whichever is less. People above the age of 60 years, or retired defense personnel above the age of 50 years can open this account with as low as Rs.1,000. The maturity of the scheme happens in 5 years, but it can be extended by three years further. the interest rate being offered is 7.4% currently, annually. There are tax benefits too, under Section 80C, that can be availed on this scheme.
- Post Office Monthly Income Scheme (POMIS)
The biggest challenge faced by senior citizens is to have an assured monthly income. The POMIS offers investors to receive interest, on their invested amount, on a monthly basis. The maximum amount to be invested is 4.5 lakhs up to a maximum of 5 years on a single investor account. If it is a joint account, the invested amount goes up to 9 lakhs. The current interest rate is 6.6%.
- Pradhan Mantri Vaya Vandana Yojana (PMVVY)
This is a retirement-cum-pension plan launched by the government of India, and it is being managed by the Life Insurance Corporation of India. Under this scheme, the investor gets a pension on a monthly/quarterly/half-yearly/annual basis, as opted by them. This scheme is only for senior citizens. The minimum amount to be invested is 1.5 lakhs, while the maximum is 15 lakhs to be invested over 10 years. The interest offered is 7.4% p.a. presently, and there are tax benefits under Section 80C of the IT Act for it too.
Final Take
Senior Citizens get various special offers on their investment schemes by banks and other government-monitored plans. However, one of the safest investments is senior citizen FD as they are the safest, most lucrative, and come with various tax benefits as well. Also, they can be broken before maturity against some minor interest charges. Also, filling up form 15H with the banks can save them from TDS deduction on their FD returns.
