Who are Senior Citizens?
Senior citizens are the people who have attained the age of 60 years and above, they are normally retired and they receive the pension in case they worked for government department.
The state is responsible to make effective provision for securing the right to public assistance for old age people. Pensions, travel concessions, income tax relief, medical benefit, extra interest on savings are the security of older persons for financial support. The most important aid to senior citizens is the Social Security program.
The perfect portfolio for the senior citizens should have a balance between both income and growth funds as they cannot take the risk, it depends on the needs of every individual.
It is normally recommended for the senior citizens to opt for the following plans that are the benefit to the most.
- Fixed Deposits in Banks and Post Office
- Pension Plans
- Senior Citizen Saving Scheme
- Equity-Linked Savings Scheme (ELSS)
- National Savings Certificate (NSC)
- Fixed Deposits:
Fixed Deposits (FD) can be started in any bank or post office where we have the account. This is one of the most secured and guaranteed return schemes. It is very simple for starting the FD. Senior citizens normally get higher interest rate than the normal citizens. The minimum tenure which is required to start an FD is 7 days and the maximum is 10 years. Accrued interest on the FD are possible in which amount is tranfered to the savings account periodically i.e. principal plus interest – at the time of maturity. Post Offices offer the term deposit schemes of 1 to 5 years, and higher interest rates than bank FDs. Although the interest received from fixed deposits is taxable, and the interest rates are different.
It is advisable that everyone should have a pension plan. Pension plans are a good investment option in order to ensure a regular source of income. There are many kinds of pension plans available. There are single deposit investment options for a large amount; you can deposit smaller amounts also regularly. The minimum investment is as low as Rs. 200. These plans offer 3-7% interest rates. Lock-in periods could be as low as 3 years. EPFs and PPFs are also type of pension plans, where regular deposits are done and the interest rate is between 8.1% to 8.8%.
Senior Citizens Savings Scheme:
This scheme is specially tailored for the needs of senior citizens which is available both in banks and post offices. The maximum amount you can deposit is Rs. 15 lakh and the tenure is 5 years there is option to extend it to 3 years more. Interest rate on Senior Citizens Savings Scheme is highest 8.5% to 9.5%. But the investment made in Senior Citizens Savings Scheme is tax-deductible under Section 80C on the interest earned.
Equity-Linked Savings Scheme (ELSS):
ELSS is a market-linked savings plan that gives excellent returns if the investment portfolio is chosen wisely. ELSS is not only for the senior citizens, because of its market-linked nature. It also gives tax benefits which means that the amount you invest in ELSS is exempted from taxation under Section 80C. The minimum investment amount is Rs. 500 and as high amount as possible. The locking period of the fund is just 3 years, withdrawal before the locking period is not possible.
National Savings Certificate (NSC):
NSC is other Post Office-based savings scheme which offers good returns and is safe form of investment. NSC certificates multiples of Rs. 100 every month for 5 years, with the minimum contribution being Rs. 100. NSC gives an interest of 8.1%. There is no tax deduction at source and the invested amount is tax-deductible under Section 80C. Premature withdrawal of the amount is not allowed.
Documents required for investing are:
- Age proof — Self attested copy of either of the following documents
- Senior Citizen Card
- Birth certificate issued by MC/Gram Panchayat/District office of registrar of births and death
- Voter ID card
- PAN card
- Ration card
- Date of birth certificate from the school
- Driving license
It is very necessary to control the income and expenses after retirement for having a sustainable lifestyle. By investing in various schemes it will give the sufficient income after quitting the work. The portfolio always needs to be diversified with long term and short term plans and schemes that give higher rate of returns. An ideal portfolio for a senior citizen should deliver a balance between both income and growth to deliver regular income and wealth creation to the senior citizen.
This will make them financially independent and enjoy financial security even after retirement.