After working for a number of many years, a retiree appears ahead to receiving retirement advantages that might usually embrace provident fund quantity, gratuity and different superannuation funds. These retirement funds have to be deployed in such a means that it helps to fulfill the common earnings necessities within the last years of 1’s life. Therefore, a considered mixture of post-retirement investments is what one should deal with that not solely gives an everyday earnings but additionally ensures security and liquidity of cash, apart from minimising tax legal responsibility.
Here are just a few funding choices for retirees to diversify their retirement kitty.
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Exclusively obtainable with Life Insurance Corporation of India (LIC), Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a one-time lumpsum funding scheme for 10 years with an choice to obtain an everyday earnings both month-to-month, quarterly, half-yearly or yearly, within the type of pension. Anyone above 60 years of age can make investments a most quantity of Rs 15 lakh (Rs 30 lakh together with partner) in PMVVY. For FY 22-23, the PMVVY will present an assured pension of seven.40% every year payable month-to-month. This assured price of pension shall be payable for the total coverage time period of 10 years for all of the insurance policies bought until March 31, 2023.
Senior Citizens Saving Scheme (SCSS)
Senior Citizens’ Saving Scheme (SCSS) has a five-year tenure, which might be additional prolonged by three years as soon as the scheme matures. One could open a couple of SCSS account however the funding restrict for all accounts taken collectively is `15 lakh. Currently, the rate of interest is 7.4% every year, payable quarterly and is totally taxable. Investment in SCSS is eligible for tax advantages beneath Section 80C and the scheme additionally permits untimely withdrawals however then the tax profit will get reversed.
Floating Rate Savings Bond
Floating Rate Savings Bond, 2020 (Taxable) comes with a tenure of seven years. Interest is paid twice a yr, on July 1 and January 1 every year. For Floating Rate Savings Bond, the speed of curiosity is the same as the rate of interest on NSC plus 0.35%. The rate of interest will preserve various throughout the tenure of the scheme relying on the rate of interest of NSC. There is not any higher restrict on funding in Floating Rate Savings Bonds.
Post Office Monthly Income Scheme (POMIS) Account
POMIS is a 5-year funding with a most cap of Rs 9 lakh beneath joint possession and Rs 4.5 lakh beneath single possession. The rate of interest is about every quarter and is presently at 6.6% every year, payable month-to-month. The rate of interest stays mounted for the whole tenure. The curiosity earned in POMIS could also be credited to a submit workplace financial savings account and a mandate could also be offered to switch the funds to recurring deposits in the identical submit workplace.
Bank mounted deposits (FDs)
Currently, rates of interest on financial institution mounted deposit (FD) are round 6.5% and wish to go up. Therefore, as a substitute of locking funds for a selected period, one could unfold the quantity throughout completely different maturities by way of ‘laddering’ to handle the ‘re-investment risk’. When the shortest-term FD matures, renew it for the longest period and proceed the method as and when numerous FDs get matured.
Senior residents get a further curiosity of 0.5% every year on their deposits, whereas some banks present Special Deposits providing a lot increased charges on particular tenure. For these retirees seeking to save tax as nicely, the five-year tax saving financial institution FD might be an choice to think about.
LIVING ON A pension
Pradhan Mantri Vaya Vandana Yojana bought in FY22-23 gives an assured pension of seven.4% every year for the total coverage time period of 10 years
For Floating Rate Savings Bond, the speed of curiosity is the same as the speed of curiosity of NSC plus 0.35%
Investment in Senior Citizens Saving Scheme is eligible for Section 80C tax advantages
Source: www.financialexpress.com”