Choose FD for Senior Citizen to Save Taxes and Fund your Retirement
Retirement leaves you with many options to invest your precious money and to earn some good income from them. Different investment options available in the market have different pros and cons. An FD for senior citizens is a safe option to save on taxes and to keep funding your retirements.
However, there are many other options from which you can choose like Senior Citizen Savings Scheme, Post Office Monthly Income Scheme, Tax-saving Mutual Funds and Bonds, Cash Reserves/Savings Account, etc.
Your retirement fund includes all your monthly savings, pensions, bonuses and extra income earned from other sources.
A safe option to pool all your money is the Bajaj Finance FD for senior citizen which provides an additional interest rate of 0.35% along with the normal cumulative rate of 7.85% for a tenure of 15 months on a minimum amount of Rs. 1 Lakh.
Senior Citizens Saving Scheme (SCSS)
SSCS is perhaps the most viable option for retired people and senior citizens that can be availed from a post office, by any individual above the age of 60 years.
It is also available for people who have retired early, if they invest in this scheme within the first month after they receive their funds for retirement.
The scheme usually comes with a 5-year duration. However, it can also be extended up to 3 more years post maturity.
The rate of interest on the scheme is 8.6% p.a. It is paid every quarter and is taxable.
The scheme is eligible under the Section 80C for availing tax benefits. The maximum limit of investment is Rs. 15 Lakh and it also can be withdrawn prematurely.
Post Office Monthly Income Scheme (POMIS)
POMIS can be availed either with single or joint ownership. The maximum investment capital for single and joint ownerships are Rs. 4.5 Lakhs and Rs. 9 Lakhs, respectively.
The rate of interest currently stands at 7.8% p.a. and the instalments are monthly payable. The rate of interest herein, is fully taxable.
Fixed Deposits (FDs)
When you choose to invest your retirement fund in FD, you don’t have to invest all your money in the same account.
Start from investing in FDs for senior citizen with short durations. As it would start maturing, you can re-invest for longer tenures.
NBFCS offers opening a FD account for a tenor from anywhere between 12 months to 5 years with a higher interest rate to get your cash flow incoming for your daily needs.
Mutual Funds (MFs)
You can also allocate a certain percent of your retirement money into equity mutual funds.
However, it is a safe option to invest and to diversify your funds in large capital instead of going for mid and small capital funds.
The reason is that you would be able to earn a required monthly income, instead of earning high returns.
Debt MFs are a good tax-saving option, as income from these are taxable at 20% if the funds are carried on for more than 3 years.
Unlike other options which include Mutual Funds and other tax-free bonds – FDs have a flexible tenure.
The flexibility allows you to distribute your amounts across different accounts and earn you good returns.
For saving tax, choose a FD which has a definite lock-in period of 5 years.
Investing in this FD helps you avail the benefits under Section 80C. However, you cannot withdraw money from here before the FD matures.
The interest rates on FD provided by companies like Bajaj Finance, are usually higher than banks which amounts up to 7.85%.
You can calculate your own interest rate through a Fixed Deposit Calculator which can help you calculate the interest and the matured amount.
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Category: Retirement
