Today, senior citizens are no longer dependent upon their children in their retirement years. Most retirees are living a financially independent life due to the better financial awareness and wise investments. But given the increasing inflation, rising healthcare costs and increasing longevity of life, it has become even more important for us to look for investment options that provides a steady source of income in the later years of our life.

There are many investment options available in India specifically for senior citizens, and here’s a look.

  1. Senior Citizens Savings Scheme:Any person over the age of 60 years is eligible to invest under this scheme. People who opt for voluntary retirement can invest from the age of 55 years. Investments can be made for 5 years, however there is no provision to withdraw money under this scheme before expiry of the tenor. A maximum investment of Rs.15,00,000 can be made in this account, which yields returns at about 8.5% p.a. Interest is paid quarterly and returns are market-linked based on the 5-year government bond yield. It is a risk-free investment since it is government backed investment option. Also, investments made under this scheme are eligible for tax deduction under section 80C.

2. Senior Citizens Fixed Deposits:Senior citizens fixed deposits are just like regular fixed deposit but with a higher rate of interest. Usually, these fixed deposits offer 0.25% to 0.50% higher interest rate than normal FDs. It is the most secure and risk-free investment option that provides regular income in your retirement years at a fixed interest rate. In case of FDs, you can also choose the interest pay-out depending upon your requirements. The time period for investment in FD is quite flexible. Also, if you are in need of money, you can withdraw any time by paying a penalty or take a loan against your FD.

3. Post Office Monthly Income Scheme (POMIS):This investment option can be made at any post office. It is five-year investment scheme that helps you earn interest at 7.80% p.a., which is payable on a monthly basis. Anyone who is 10 years or older can invest in this scheme. You can start this investment with a minimum deposit of Rs.1500 and make a maximum investment of Rs.4,50,000. If the account is held jointly, you can invest further up to a limit of Rs.9,00,000. You can make premature withdrawal under this scheme by paying certain amount as penalty. 

  1. Annuities: Annuity is another secure investment option for retirees where you can buy annuity plans from life insurance companies, which currently yield taxable pension at about 5% to 6% per annum. In case of an annuity, there is no provision of returning the capital amount and you only receive returns in form of pension. 
  1. Tax-free bonds: They are only issued by the government-backed institutions, which make it a safe investment option. It is usually offered by Indian Railway Finance Corporation, Power Finance Corporation, National Highway Authority of India, and other similar organizations. Also, they can be easily bought and sold on the stock market since they are listed there. They are generally the long-term investment that matures in 10, 20 or 30 years depending upon the bond. Hence, you should consider your financial goals before making this investments, but note that the interest earned on these bonds is tax free.

If you are thinking about investing in senior citizens fixed deposits, try Bajaj Finance’s Fixed Deposit offerings that yield an interest of 8.10%. Safe from market volatility and with high safety ratings and flexible tenors, this may be the investment scheme that you looking for.

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