Senior citizens looking for regular income instruments usually prefer an investment product that has low risk, offers high return and comes with high liquidity. People who are planning for their post-retirement investment also prefer similar aspects. So, here are some attractive investment instruments that one should consider to generate a regular income post-retirement.

FD With Monthly Interest Plan

FD comes with the option of getting the interest at maturity and with monthly interest plan (MIP). For senior citizens looking for a regular income, FD with MIP can be a good option. If you are investing before retirement, then try to keep the maturity of FD till you reach the age of 60 years. After the age of 60, you will be entitled to the benefit of the senior citizen FD rate, i.e., an extra interest of around 0.50 per cent to 0.75 per cent per annum. Interest on senior citizen FDs with MIP varies from bank to bank and ranges from about 7 per cent to 8.50 per cent per annum for a maturity period of 3 years. FD interests are subject to income tax according to the applicable slab rate.

Senior Citizen Savings Scheme

You may plan to invest the retirement corpus in a senior citizen savings scheme (SCSS) for five years. SCSS provides interest income every quarter. The prevailing interest on SCSS is 8.20 per cent per annum. It comes with a lock-in requirement. An individual can invest a maximum amount of up to Rs 30 lakh in SCSS. Investment in SCSS qualifies for tax deduction benefit u/s 80C, subject to a maximum prescribed limit of Rs 1.5 lakh in a financial year.

Mutual Funds With A Systematic Withdrawal Plan

Mutual funds allow investors to withdraw money from their investments in a systematic manner called Systematic Withdrawal Plan (SWP). Senior citizens can withdraw fixed amounts from their investments regularly. Ideally, the rate of withdrawal should be lower than the rate of growth of the underlying mutual fund scheme. So, when using the SWP option, it’s important to keep a strict tab on the growth rate offered by the underlying fund and avoid erosion of their capital.

What’s The Best Option?

Apart from the investment options mentioned above, you may also explore investing in instruments such as Pradhan Mantri Vaya Vandana Yojana (PMVVY), post-office monthly income scheme, RBI floating rate bonds, etc. However, it’s better to diversify your investments across different options such that the risk and return fits into your requirement post-retirement.

The author is an independent financial journalist