When you are retired or close to retirement in a few years the first concern for many is maintaining stable savings and a reliance income. Senior citizens in particular looking for steady payouts and guaranteed returns can consider fixed income schemes that provide some financial security.
The investment provides a good and steady pad up to your pension stream with regular payouts and is an attractive option at a time when active earnings from employment has tapered.
Why should you consider fixed-income investments?
You may have invested in more risky options such as equities during your employment, but near or post-retirement is the time to shift focus from growth to stability. It is for this consistency and dependability that fixed-income investments factor in the equation.
Think of fixed-income funds as the financial equivalent of a steady heartbeat. They don’t race ahead, but they keep everything running smoothly, even when markets get rocky.
Top 5 fixed income options for senior citizens
A Systematic Withdrawal Plan (SWP) can provide you with a regular income by allowing you to withdraw a set amount each month from your existing mutual fund investment. In fact, it allows you to withdraw at regular intervals, while still keeping the corpus invested.
- It is tax-efficient compared to interest income from traditional options as it removes the pressure of lumpsum credit into your account.
- It can be paused, modified, or stopped at any time, depending on your requirements.
A Senior Citizens Savings Scheme (SCSS) account is another attractive option. The government-backed retirement plan allows for citizens 60 and older to invest between ₹1,000 to ₹30 lakh for a period of five years, at annual interest rate of 8.2%.
- It can be extended for another 3 years. Once the investment is done the interest rate remains the same throughout the tenure.
Five-year bank fixed deposits are also a great financial tool for saving toward specific goals and can be automated so that deductions from your bank account ensure a neat, fixed amount is set aside each month.
The Post Office Time Deposits is a scheme that offers investors fixed, sovereign-backed returns for tenures of 1, 2, 3, or 5 years, with interest rates ranging from 6.9% to 7.5%. They provide safe, predictable and risk-free investments with quarterly compounding and better returns than most bank FDs.
Other Post Office Schemes such as Savings Account, Monthly Income Scheme (MIS), and National Savings Certificate (NSC), offer safe, government-backed returns of 6.7%–7.4% with capital protection, predictable interest, and tax benefits, making them ideal for conservative, long-term investors. One should carefully understand the terms and conditions of these schemes before proceeding with them.
Note that investing in fixed income is not a one-time activity. The investor should meet with their financial advisor at least once every six months to a year to review the portfolio performance and make changes as needed.
Disclaimer: This story is for educational purposes only. We advise investors to check with certified experts before making any investment decisions.
