Safety first, always: After decades of hard work, retirement should be about peace of mind. The goal is to protect your savings, generate steady income, and ensure easy access to money when you need it.
Keep some money easily accessible: Don’t lock up all your savings. Unexpected situations can arise anytime. Keep at least 6–12 months of expenses in a regular savings account or a short-term fixed deposit that you can access easily without penalties.
If you’re an elderly/senior citizen you can fall under any one of the following categories:
- You’ve a monthly income for your sustenance. Eg: you’re a retired govt employee with a monthly pension or you have a rental income from some property you built/acquired. Then you just need to protect your money with decent growth rate. For this purpose, the Senior citizen savings scheme (SCSS) is a good option. You can invest up to Rs. 30 lakhs in your nearest post office or authorized bank, and currently earn 8.2% interest per year. The interest is paid quarterly directly to your bank account. It has a 5-year tenure and is backed by the Government of India, making it completely safe. You can extend the maturity period for 3 more years.
- You don’t have any pension, rental income and you’ll need a regular income for sustenance. A good way is to divide your whole corpus into 3 parts. First part, you can buy some dividend yielding stocks like PSU stocks which give you regular dividends. The second part, you can invest in Post Office Monthly Income Scheme (POMIS), it currently offers up to 7.6% interest per year, paid monthly to your bank account. The maximum investment is Rs. 4.5 lakh individually or Rs. 9 lakh in a joint account. It has a 5-year lock-in period and is government-backed. The third part is FDs, mentioned next.
Fixed Deposits (FD): Banks offer senior citizens 0.5% higher interest on FDs compared to regular FDs. While rates may vary, they’re safe and predictable. You can create an FD ladder by spreading money across multiple FDs with different maturity dates, ensuring regular money coming in.
What to avoid: Stay away from insurance policies that double as investments. At this stage of your life, you don’t need life insurance unless you have dependents.
Avoid Unit Linked Insurance Plans (ULIPs), complicated mutual fund schemes, or anything where the agent talks more about commissions than your safety. Avoid schemes that promise unusually high returns. If something sounds too good to be true, it probably is false.
Your retirement money needs to work for you, but more importantly, it needs to be there when you need it. Choose safe, government-backed options. Your peace of mind is worth more than chasing an extra percentage point of return.
Paweii Kayina
Founder, Moneybar