Retirement Planning: During employment, a fixed amount of salary is received every month. But after retirement, that regular income stops. Then the money saved has to be used to meet household expenses. Therefore, it is necessary to plan before retirement in such a way that along with the security of the capital, one can also get some income at regular intervals. According to the information given by you, 5 investment options can be considered for regular income after retirement.
Senior Citizens Savings Scheme or SCSS
Senior Citizens Savings Scheme (SCSS) can be an important option for retired senior citizens. There is a system of getting interest on quarterly basis by investing a lump sum. According to the information given by the source, at present 8.2 percent interest is calculated annually on SCSS. For example, investing Rs 30 lakh can yield interest of around Rs 2.46 lakh per year. This means that the interest payment amount is approximately Rs 61,500 every three months. This type of system can be convenient for those who need cash income at fixed intervals for regular household expenses.
Post Office Monthly Income Scheme or MIS
If the main goal is to get income every month after retirement, then Post Office Monthly Income Scheme or MIS can be considered.
In this scheme, there is a system of getting monthly interest after investing one time money. As per the given information, the annual interest rate has been calculated assuming 7.4 percent.
For example, if you invest Rs 10 lakh, you can get interest of around Rs 74 thousand per year. According to this, the income of about Rs 6,667 per month is calculated.
But the decision should be taken after considering the investment maximum limit, tenure and current interest rate.
Bank FD—Easy and Known Option
Bank Fixed Deposit or FD is a widely used method of keeping retirement money. Its main advantage is that one gets a clear idea about the interest rate and tenure at the time of investment. Let us assume that an FD is earning 7 percent interest per annum. By investing Rs 10 lakh, interest can be around Rs 70 thousand in a year. Depending on the bank and the type of FD, there can be an opportunity to get interest monthly, quarterly or at the end of the term. Instead of making one big FD, the issue of dividing the money in multiple FDs of different tenures as per the need can also be considered. In this case, if necessary, it may not be necessary to break the entire investment.
RBI Floating Rate Savings Bonds
For those looking for a relatively government-backed investment option, RBI Floating Rate Savings Bonds can also be considered.
Like the name, the interest rate of this bond is not fixed; It may change with time as per specific rules. Therefore, before investing, it is important to know the current interest rate, tenure and rules for withdrawing money before the stipulated time. Those who do not need the money immediately, it is important to check whether such a long-term option is compatible with their financial plan.
Annuity Plan—Regular income system like pension
If there is a need to receive money at fixed intervals for a long time after retirement, Annuity Plan can be an option.
In this case, instead of investing money in one go, arrangements can be made to receive money at fixed intervals. It is possible to create a regular income structure much like a pension.
For example, if you have Rs 20 lakh in hand after retirement, a part of it can be kept in an annuity plan. The regular money received from there can then be combined with other income and used for household expenses. However, the annual return, tenure, type of payout and other terms may vary from plan to plan. Therefore, before choosing a particular plan, it is important to check its terms and conditions.
How can Rs 30 lakh be divided?
If you have Rs 30 lakh in hand after retirement, then instead of keeping the entire amount in one place, a plan can be made to divide it according to different needs.
According to the example of the source, fixed interest can be arranged by keeping a part of this money in SCSS- for monthly income, another part for monthly income in MIS- and the other part for FD-. Besides, it has also been said to keep aside Rs 5 lakh for emergency situations.
That is, when it comes to using retirement money, it is important to keep in mind not only the returns but also the monthly expenses, urgent needs and future financial liabilities.
Investing is not just looking for higher interest rates.
While investing retirement funds, it is better to just look at where the highest interest is being received. Rather, a few issues need to be judged together.
How safe is the investment capital?
How frequently will you receive income?
How easy is it to withdraw money for urgent needs?
What is the investment period?
What is the effect of tax on interest income?
What could be the future expenses of the family?
It is very important to arrange regular income as salary stops after retirement. Instead of keeping the saved money in one place, various options like SCSS, Post Office MIS, Bank FD, RBI Floating Rate Savings Bonds and Annuity Plan can be considered. But before investing, it is important to understand the issues like interest rate, risk, money withdrawal rules and taxes.