For this amount, you will get a monthly pension of Rs 9, So, you must invest Rs 15 lakh — the purchase price — to get monthly, quarterly, half-yearly or annual payouts. The interest rates applicable for different periods of payout increase marginally. The pension rates go up to 7. The table gives the details. The investment is for ten years.
At the end of 10 years, you get back the purchase price Rs 15 lakh. In case of an unfortunate event before ten years, the purchase price is returned to the nominee. The interest paid by the scheme is fully taxed at your applicable slab.
There are no tax benefits or deductions available with this scheme. You can close the account prematurely only for exceptional reasons, such as treating any illness for yourself or your spouse. It is also among the safest.
It is a scheme run by the government of India. SCSS is like a fixed deposit scheme with assured returns and no risks. This interest is paid out every quarter. The interest rate is reviewed every quarter by the government. You can open an account in a post office or a few select banks. Only senior citizens can invest in the scheme. However, a couple of other categories of persons are also allowed to invest in the SCSS. A senior citizen who is aged 60 or above A person above the age of the 55 but below the age of 60 Retired defence personnel above the age of 50 and below the age of 60 The latter two categories can apply subject to conditions.
They should show proof of having taken voluntary retirement. And the proceeds from the retirement must be invested within a month of receiving them. These payouts are made in January, April, July and October, usually on the first day of those months.
The SCSS account runs for five years. You can extend it for another three years upon maturity, which can be done only once. Investments up to Rs 1. Of course, this section competes with a host of other options such as home loan principal, PPF public provident fund , ELSS equity-linked savings scheme , provident fund, and five-year bank deposits, among others. The interest earned is added to your income and taxed at the applicable slab. Premature closure is allowed, but with penalties.
No interest is paid for withdrawals within a year of opening the account. If you want to pull out the money between years one and two, 1. Government of India bonds GSecs One of the relatively less-explored options is buying government bonds for their interest payouts that could serve as pensions for the retired. It is the safest investment, given that government securities carry no credit risk.
Being guaranteed by the sovereign, you are sure to get the interest payouts. Over the past year or so, inflation has been on the rise. After a prolonged pause, the RBI reserve bank of India increased rates twice in two months by a cumulative 90 basis points. Yields already inching up have shot up for government securities across tenures. Interest rates and bond prices are inversely correlated. So, the fall in bond prices has resulted in rising yields. G-secs that are long-dated and mature years into the future — , , , and even — are now available at attractive yields of 7.
At these levels, the yields are higher than any other regular income option available, with complete safety. Note however that these yields change every day. These government securities pay out interest twice a year, which can act as pension income for the retired. There are some essential points to note here, however. First, these bonds pay the coupon rate. Coupon rates must not be confused with the yield. For example, the This will be the rate of interest payout. So, for a Rs 1 lakh investment, you will receive a total of Rs 6, a year in two half-yearly installments.
But the yield is 7. Healthcare: During a recession, consumers may hold off on elective procedures, but they still spend on medicines, regular check-ups and urgent surgeries. Dividend Stocks Dividends represent a percentage of profits paid out to shareholders. At the top are so-called Dividend Kings and, after them, the Dividend Aristocrats. Mutual funds focusing on dividend stocks could also be a good choice. Because mutual funds are managed by top investment professionals, your investment decisions will be made by those in the know.
Real Estate Rentals A rental property can be a solid source of income if you have the cash to buy it. If you pay the right price, you can charge rent that will cover taxes and the mortgage, in addition to putting some extra money in your pocket. Being a landlord is work, so make sure you can handle it. If not, maybe you can afford to hire someone who will. Certificates of Deposit Certificates of deposit , or CDs, are a strong, low-risk investment option for retirees.
Basically, you give a certain amount of money to a bank. Generally, you can choose this amount, though some banks have minimums. The interest rate is predetermined and increases the longer the term. CDs are great for retirees because they force you to save a certain segment of your money for later in your life — and you earn interest on top of that.
Retirees should still make sure this money is working for them, though. Rather than letting your cash sit in a checking account or traditional bank savings account where you get no or next-to-no interest, put the money you need immediate access to in a money market account or a high-yield savings account.
The Bottom Line There are a lot of ways for retirees to invest even after their working days are done. It is important to do so because you want your retirement nest egg to last as long as possible. And with people living longer than ever, your nest egg may need to stretch further than you thought.
Taxes and retirement When you invest for retirement, you typically have three main options: You can put the money into a retirement account that's offered by your employersuch as a k or b plan.
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| Investing my money after retirement | Stay diversified: Diversification is recommended for investors at any age, but it may be most critical when investing in retirement. This will be the rate of interest payout. Here are some low-risk options to consider: High-yield savings accounts While some of your money should be in the stock market, it's also good to have more on hand in a savings account that's easily accessible. How to Choose Index Funds How much of each kind of index fund should you have? Our goal is to give you the best advice to help you make smart personal finance decisions. |
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