Senior citizens can generate steady monthly income during their retirement life through these four investment avenues: Senior Citizen Savings Scheme (SCSS), Post Office Monthly Income Scheme (POMIS), Senior Citizen Fixed Deposit Scheme, and RBI Savings Bonds. These deposits are relatively of low duration and allow investors to diversify their portfolios across different maturities. These instruments provide liquidity and help manage investments with low risks. Seniors can spread the deposits across various maturities and schemes to meet their needs.

Also Read: Sukanya Samriddhi Scheme Vs NPS Vatsalya: How These Two Savings Schemes For Children Differ

Senior Citizen Savings Scheme

Senior Citizen Savings Scheme (SCSS) is a government-backed secure investment instrument for people aged 60 and above. It offers higher interest rates than regular savings schemes. SCSS has a five-year lock-in period, but early withdrawals are allowed. The minimum deposit amount is Rs 1,000, and the maximum limit is Rs 30 lakh. Also, the account can be opened individually or jointly with a spouse. Deposits exceeding Rs 1 lakh must be paid via cheque. SCSS is eligible for tax exemption under Section 80C of the Income-tax Act.

Post Office Monthly Income Scheme (POMIS)

POMIS is a five-year investment instrument offered by the Post office. The scheme allows a maximum investment of Rs 9 lakh for an individual account and Rs 15 lakh for a joint account. The interest is paid monthly until the investment matures. However, POMIS does not qualify for tax benefits, and the interest earned is fully taxable. Premature withdrawals are not allowed. If an account is closed after a year but before three years, 2 per cent will be deducted from the principal amount. Premature closure can be done by submitting a filled prescribed application form and a copy of the passbook to the post office branch where the account is held.

Senior Citizen Fixed Deposit Scheme

Senior citizens can generate consistent monthly income through bank fixed deposits. Seniors get an extra 0.50 per cent interest than the rest of the public. They can also use the “laddering technique” to ensure regular income with different maturities of the FDs. This strategy ensures liquidity and helps manage re-investment risks. There is also a five-year tax-fixed deposit scheme, which can benefit seniors. These FDs come with a mandatory five-year lock-in period but qualify for deductions under Section 80C. Premature withdrawals are not allowed.

RBI Floating Rate Bonds

The interest rates of RBI Savings Bonds are tied to the National Savings Certificate (NSC), which is 0.35 per cent higher than the NSC interest rate. The interest rate for RBI floating rate savings bonds is reviewed semi-annually, unlike the NSC which is reviewed quarterly. The minimum investment for these bonds is Rs 1,000, with a fixed maturity of seven years. Early withdrawals are allowed for people aged 60 and above, subject to a minimum lock-in period. These bonds do not offer compound interest, and the returns are paid semi-annually on January 1 and July 1 each year.