Tuesday, Sep 19, 2023


You would have read several articles on the Importance of retirement planning. This might have made you curious about the investment options available that cater to the need of making a significant retirement corpus. This article will serve as a guide to various investment options for senior citizens.

Post Office Monthly Income Scheme (POMIS)

It is a government-backed investment option that promises guaranteed and fixed annual returns to an investor. Note that, you can also opt for a fixed monthly payout. As POMIS is a low-risk investment scheme, it is ideal for senior citizens or conservative investors who have a low-risk appetite.

POMIS has a tenure of 5 years.In case you want to withdraw your corpus before that, you would need to pay the penalty. Additionally, investors can invest on behalf of their children as well, if the latter is above the age of 10.  Any Indian citizen can invest in this scheme. It is not a preferred mode of investment if one is looking for tax-saving attributes.

National Pension System (NPS)

NPS is a government-sponsored pension scheme that is designed for employees, except for those belonging to the armed forces. This scheme is designed to secure the post-retirement financial future of investors. Under this scheme, the investor’s contribution is reserved to market-linked securities such as debt and equity.Thus the returns on this schmedepend on the performance of these instruments.

NPS encourages investors to invest in a pension account through their working life regularly. After retirement, an investor can withdraw a part of the retirement corpus in lumpsum while the balance can be paid out as monthly pension.

NPS subscribers also enjoy a tax exemption of up to Rs. 1.5 lakh on their NPS investmentsunder section 80C of the Income Tax Act, 1961. NPS is regulated by the Pension Fund Regulatory and Development Authority of India (PFRDA)

Senior Citizen Savings Scheme (SCSS)

It is a government-sponsored savings scheme offered to Indian citizens who are aged 60 or above. The Government of India introduced this scheme in 2004intending to provide a steady and secure source of income to retired citizens. The scheme matures in five years, which can further extended to three years.

The interest rate on SCSS is declared during the time of investment. It remains constant throughout the investment tenure and is unaffected by subsequent alterations. SCSS offers one of the highest interest rates as compared to other savings-oriented instruments available in India.

SCSS also offer a tax benefit of up to Rs. 1.5 lakh u/S 80C. An individual can apply for the SCSS scheme through public and private banks or the Post Office.

Mutual funds

Mutual funds are financial instruments that pool the money of various investors to invest in securities such as equities, bonds, money market instruments, cash and cash equivalents, etc. These funds are usuallyprofessionally managed by a fund manager to yield the highest possible returns. The returns depend on the market performance of the fund’s underlying securities. You can invest in mutual funds either via a Systematic Investment Plan (SIP) or lumpsum mode.

Mutual fund investmentsare broadly diversified into debt and equity and equity-related instruments. Debt funds are relatively safer instruments and offer low-moderate returns. In contrast, equity funds carry moderate-high risk but offer proportional returns.

Now, that you have a fair idea about different investment options to create a retirement corpus, what are you waiting for? Remember, the sooner you begin with your retirement planning, the more significant corpus you’ll have when you actually retire. You can even consult an expert who can help you with your journey of financial planning and retirement planning. Happy investing!