Retirement is inevitable. While it gives you time to reflect on a life lived fully and plan forward, it must be supported by a regular income. The corpus from your provident fund (PF) and public provident fund (PPF) is good enough to support your future, but it will be better to have a regular monthly income from your investment. Since you need monthly income, it is advisable to invest in risk-free or very low-risk assets. 

Let’s have a look at 3 of the best options that retirees can avail of for a regular monthly income.  

Bank Fixed Deposit With Monthly Interest Payout

One of the most popular instruments is bank fixed deposit. The interest rate of bank fixed deposits (FDs) depends on the Reserve Bank of India’s (RBI) policy rates. The interest can be paid monthly or at the time of maturity, depending on your choice. The monthly payout option can be chosen at the time of opening the fixed deposit. Usually, senior citizens get 0.25 per cent to 0.75 per cent extra interest on the bank’s fixed deposit compared to the non-senior-citizens. 

The interest income by senior citizens up to Rs. 50,000 from bank deposits, including FDs, is eligible for a tax deduction benefit u/s 80TTA. The banks apply tax deducted at source (TDS) at 10 per cent if the interest from fixed deposits exceeds Rs. 50,000. The interest rates may vary from bank to bank. Compare interest rates offered on FDs by different banks on fixed deposits before you invest.  

Post Office Monthly Income Scheme (POMIS)

As the name suggests, in POMIS, the interest payout is done monthly. Retiree individuals can invest up to Rs. 9 lakh in the POMIS scheme. The maximum investment limit in a joint account is Rs. 15 lakh. So, if you want to invest more than Rs. 9 lakh, you may invest jointly with your spouse.

The interest rate varies as per the government policy, which is revised every quarter, but the rate remains the same for the entire tenure. The current annual interest rate applicable on POMIS is 7.4 per cent per annum. 

Pradhan Mantri Vaya Vandana Yojana (PMVVY)

PMVVY is another popular scheme that started under the financial initiatives of the government. The PMVVY scheme is backed by the government of India, so they are almost risk-free instrument. Retirees can select the pay-out frequency at the beginning of the investment. The options are monthly, quarterly, half-yearly, and yearly. So, if you need a monthly payout, select the monthly interest payout option at the time of investing in the PMVVY.

The interest rates in PMVVY are revised at the beginning of every financial year, but the rate remains fixed for 10 years for the existing investors. The maximum amount that can be invested is Rs. 15 lakh. The interest rate is 7.4 per cent in the PMVVY scheme.

Regular monthly income in your retirement should match your lifestyle and liquidity needs. The income earned from investment will ensure a stable flow of money to easily meet your regular expenses. 

Author: Yug Advisors