“Age is an issue of mind over matter. If you don’t mind it doesn’t matter."
Being old doesn’t always mean being wise, especially when it comes to financial decisions. However, securing your retired life financially is highly essential. Indian senior citizens can choose from a variety of options when it comes to saving schemes and government benefits.
Some benefits are applicable from age 60, while others are available from age 65.
Some benefits available for senior citizens are explained below:
A pensioner who is drawing retirement pension or family pension from the Government needs to mandatorily submit a life certificate. It must be submitted before November 30 each year, at the pension drawing banks or the respective post offices.
In 2014, the Government introduced Jeevan Pramaan, an Aadhaar-based digital life certificate for pensioners. The certification was launched to do away with the requirement of submitting a physical life certificate each year to ensure continuity of pension. Jeevan Pramaan is an optional system and more than 9 lakh pensioners have enlisted for it. A welcome move towards greater efficiency.
Loss of any document can be a nightmare, more so if it is a financial one. Storage of sensitive and valuable documents gathered over the years is the key to ensuring peace of mind. Storing hard copies and keeping records of your financial documents is not only cumbersome but also unsafe. The risk of loss or physical damage is just too high. It is thus safer to dematerialise it. However, just going paperless is also not enough. It is important to organize all your important papers in one place. In an emergency, it becomes easier for a family member to access the required documents quickly. With e-vaults and free cloud storage, this task has become easier.
Senior citizens should be cautious of offers and discounts offered to them, especially from private institutions. Prominence ought to be given to the safety of money and not short-term benefits. It could be a fly-by-night operator looking for an opportunity. Remember, it's your lifetime earnings at stake.
Many senior citizens in the country are facing cyber-fraud or a potential fraud. There are many routes that cybercriminals are taking in order to reach their target. Please follow safe banking practices and do not disclose confidential data to any person claiming to be calling from your Bank. Be aware in order to be safe!
Among the most preferred option by most retirees, Senior Citizens' Saving Scheme (SCSS) is a must-have in a retiree’s portfolio. As the name suggests, this scheme is available only to senior citizens or early retirees. SCSS can be availed from a Post Office or a bank by anyone above 60 years of age.
As of April 2019, the interest rate in SCSS is 8.7 per cent per annum, payable quarterly and, fully taxable. The rates are set every quarter and linked to the G-Sec rates with a spread of 100 basis points. Once invested, the rates stay fixed for the entire tenure. At present, SCSS perhaps offers the highest post-tax returns among all comparable fixed income taxable products. The upper investment limit is Rs 15 lakh and one may open more than one account. The capital invested and the interest payout, which is assured, has a sovereign guarantee. Additionally, it also offers tax benefits under Section 80C and allows premature withdrawal.
The fixed deposit interest rates for senior citizens are higher than regular FD rates. These deposits have a flexible tenor ranging from 12 months to 60 months, which one can choose based on needs. Besides a safe investment avenue, this option helps provide a reasonably high growth to your savings. It also ranks high in terms of liquidity since it can be withdrawn any time during the tenor, if the need arises Moreover, all the transactions can be done online as well as at the Branch.
This option is safe and free from market fluctuations, thus assuring you a fixed return that you can count on. When opting for a fixed deposit, another advantage is that you can choose from a cumulative (with monthly or quarterly payout) or a non-cumulative (with compounded interest offered at maturity) option to suit your needs.
Post office monthly income scheme is among the popular savings schemes for a senior citizen that permits deposit up to a maximum of Rs.4.5 lakh for a single account and up to Rs.9 lakh for a joint account. This monthly income scheme offers an interest rate of up to 7.8per cent in a scheme that is known to offer reliable returns. However, the income is taxable. This option gives steady and safe returns unaffected by market forces. It also has provision to transfer the returns directly into your savings account for ease of access.
The Government issues tax-free bonds in order to raise money for funding various infrastructure projects. Given that there is no risk of non-repayment, it is an attractive option, especially for senior citizens. Senior citizens can enjoy guaranteed returns which are completely tax-free. The tenor for these bonds ranges from 10 years to 30 years, depending on the length of the project. The interest rate for these bonds usually ranges from 7.3per cent to 7.5per cent per year. Various government organisations such as Indian Railways Finance Corporation, Housing, and Development Corporation and NTPC issue such bonds.
These are mutual funds with an emphasis on a fixed income and thus considered reasonably secure. Long-term debt funds can offer value depending on market performance. These rank high in return on investment and provide returns that can go as high as 15per cent per annum. They also offer high liquidity, however, one may need to pay a charge for withdrawal before the minimum investment term. Based on risk appetite and investment horizon, a portion of investment kitty can be directed towards Mutual funds.
Choose your savings and investment avenues wisely and be safe!
The author is Chief Operating Officer, Retail Banking, Fincare Small Finance Bank