When you are a senior citizen, you would not want to worry about funds, and to live peacefully on the savings that you have accumulated over the years. In India, senior citizens are offered many benefits when it comes to the management of their finances. One of the main challenges that may affect senior citizens, is the loss of income after their retirement. Considering this, they can go for investment options offering steady income like FD for senior citizen, pension plans, Equity-Linked Savings Scheme (ELSS), Senior Citizen Saving Scheme (SCSS), etc.
FD for Senior Citizens
FD for senior citizen is almost the same as a traditional FD. Few differences include increased interest rates, no upper limits for deposits, and certain limitations in the tenor for the fixed deposit account. An FD is considered to be the most secure financial investment with guaranteed and stable returns. Following are the features and benefits of FD for senior citizens:
The tenor of FD for senior citizen is flexible (5-10 years). But, this can vary depending on the financial company.
FD for senior citizen has a nomination facility wherein the account holder can nominate their spouse or children to get the maturity sum in case of a sudden death.
The interest rates of senior citizen FDs are generally higher compared to the regular FDs.
The depositor can make partial withdrawals from their FD account.
No upper limit is set for the deposit money in a senior citizen FD account.
Guaranteed returns with increased benefits
You can calculate the FD interest rates using the FD calculator provided on the website of your financial provider.
Apart from these benefits, specific financial companies also have higher interest rates to offer for senior citizens. Bajaj Finance, offers the highest interest rate currently (more than banks) for senior citizens (8.75%).
Senior Citizen Saving Scheme (SCSS)
The SCSS has the same features as an FD for senior citizen. Following are some of the unique features that senior citizens can get by availing an SCSS:
The tenor ranges from 5-8 years
The upper limit for deposit is Rs. 15 lakhs even if the person opts for multiple accounts
The rate of interest is based on the market value of the current financial year
The person can keep more than one nominee, who will be able to avail the benefits of the scheme on maturity if the investor dies during the tenor.
Equity-Linked Savings Scheme (ELSS)
An ELSS is a type of mutual fund with diversified equities. In this scheme, an individual can invest majority of their retirement corpus. Some of the features include:
The tenor of this scheme is 3 years
ELSS has options for both - dividend and growth.
Investors get a regular income in the dividend scheme.
In the ELSS scheme, the returns up to 1 lakh are free from tax.
The lock-in period is much lower compared to other similar investment schemes.
National Savings Certificate (NSC)
NSC as a scheme has the right combination of tax saving, safe investment, and attractive interest rates. Following are the benefits and features of investing in an NSC:
There is no limit in the amount that can be deposited in an NSC account.
The scheme is meant for individuals, and so groups like companies, HUF (Hindu United Families), or trusts cannot invest in this scheme.
A minor can hold an NFC account as long as it is supervised and managed by a parent or guardian.
These certificates can be taken up in specific denominations.
Premature withdrawal is not allowed in this scheme.
The minimum investment that can be done is Rs. 100.