Tax-Saving Investments For Senior Citizens 

By BankBazaar | February 19, 2019

Read on to find out about the most popular investment schemes for retirees. 

Tax-Saving Investments For Senior Citizens  

What happens right after you retire? Does the world come to an end? Or does it continue throwing new challenges your way? Being a senior citizen is not an easy job.   

For those who have just phased into this zone, it is at once both confusing and exhilarating. Not everyone adjusts well to the onset of this new reality. For most, it takes a lot of time, sometimes years before they dust off the traces of the life they once used to live. Retirement is a temporary pit stop – it’s where you learn to take a break, seize control of your breath, and begin your life all over again.   

Tax-Saving Investments  

If there is one thing that’s good about paying taxes, it’s the fact that it keeps you on your toes. As with anything else, it requires careful planning and meticulous execution. If you are unsure whether you are making the right moves, here are some tax-saving investment options you can explore.   

Additional Reading: Mistakes That May Spoil Your Tax Saving Plans 

Senior Citizens Saving Schemes (SCSS)  

As the name suggests, this scheme is exclusively designed keeping the senior citizens in mind. The applicant needs to be over the age of 60 to be able to invest in this scheme. In order to avail this scheme, senior citizens would have to open an SCSS account with a post office or a bank offering this scheme.   

This scheme, offering benefits under Sec 80C of the Income Tax Act, comes with a lock-in period of 5 years. The investment period can be extended for another 3 years upon maturity.   

Additional Reading: List Of Saving Schemes That Are Worth Investing In 

National Savings Certificate (NSC) 

National Savings Certificate is another very popular investment scheme in India. Since NSC is a fixed-income investment tool, it is generally considered safe and risk-free. At present, it earns a fixed interest of 7.6% per annum, which is not bad considering the fact that it is a savings bond.   

It is covered under Sec 80C and therefore you can invest up to Rs 1.5 lakh a year (for tax-saving purposes) in this bond. The one thing that you need to keep in mind about NSC is that it comes with a lock-in period of 5 years. While investing in NSC, do remember to keep the time horizon in perspective.   

Additional Reading: Everything You Need To Know About National Savings Certificates  

Fixed Deposits (FD) 

Fixed Deposits have always been the go-to resource for salaried individuals and retirees alike. For retirees, banks pay an interest that is about 0.5% higher. Much like SCSS and NSC, Fixed Deposits too are covered under section 80C. The tax-saver FD comes with a lock-in period of 5 years and as far as interest rates are concerned, senior citizens need not pay any tax if the interest income is Rs 50,000 or less.   

Post Office Monthly Income Scheme (POMIS)  

Although POMIS is not as popular as the other investment options, it is a good source of regular income. It’s a 5-year investment plan that offers an annual interest of 7.7% and allows a deduction of up to Rs 1,50,000 under section 80C. The best part about POMIS is that it offers a guaranteed monthly payout. You can invest as much as Rs 4.5 lakhs in this account if you are the sole investor and Rs 9 lakhs if you are applying for a joint account.   

Additionally, you can consider investing in ELSS schemes. Although Mutual Funds carry an element of risk with them, the returns are extremely lucrative. As far as investments are concerned, there is no one-size-fits-all formula that’s available in the market. Consider your risk appetite, watch out for the time horizons, and make a calculated move.   

Ready to begin?   

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Category: Tax Tax Planning UCN
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