Senior Citizen Savings Scheme Vs Senior Citizen FD: Which Is Better For Seniors?

Senior citizens look for a risk-free income and certain products like the senior citizen’s savings scheme (SCSS) and fixed deposits (FDs) offer that. SCSS is a small savings scheme provided by post offices and nationalised banks nationwide. The government announces interest rates on an annual basis. Anyone can open FDs regardless of age and have varying tenures. Senior citizens can choose both; however, SCSSs score more than FDs. Key Differences of SCSS Vs Senior Citizen FD

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First, SCSS offers a higher rate of interest. The current interest rate on SCSS is 8.2 per cent. The interest on senior citizen FD is usually 0.5 per cent higher than the regular interest of that bank. It can differ from bank to bank. Currently, the highest one is 7.9 per cent.

Also, SCSS has a tax benefit of Rs 1.5 lakh under section 80C, but when it comes to FDs, this benefit is available only to five-year FDs.

Feature	Senior Citizen Savings Scheme	FDs
Eligibility	Senior citizens aged 60 years and above (or 55 years and above if retired)	Anyone, regardless of age
Investment Limit	Maximum Rs 30 lakh	No limit
Tenure	5 years (can be extended in blocks of 3 years infinitely)	Varies from 7 days to 10 years
Interest Rate	Quarterly revision by the government	Quarterly revision by banks, varies by bank and tenure
Tax Benefits	Tax deduction of up to Rs 1.5 lakh under Section 80C	Tax-saving FDs offer tax deductions under Section 80C

What Should You Choose

SCSS is a better option than a senior citizen FD due to its design and guarantee. It creates cash flow during retirement through quarterly interest payouts and a fixed tenor of five years, which can also be extended for three years. “However, it has a limit of Rs 30 lakh per person, and thus, once the limit has been exhausted for the senior citizen and his/her spouse, a senior citizen FD can be considered from a highly rated bank considering that deposit insurance available on a bank deposit is for a much lower amount,” says Vishal Dhawan, CEO and founder, Plan Ahead Wealth Advisor, and a Securities and Exchange Board of India (Sebi) – registered advisor.

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Agrees Renu Maheshwari, chief executive officer and principal advisor, Finzscholarz Wealth Manager, and a Sebi-registered investment advisor: “SCSS should be the first option for the senior citizens to park their money for regular income. If the asset allocation demands more allocation to fixed income securities, senior citizen fixed deposits should be opted for.”

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