Retirement planning is often neglected in India. In most cases, irregular income, on and off from jobs, and a lack of proper planning and financial literacy are to be blamed. However, regardless of age, you must have a solid plan to ensure that you earn regular income post-retirement.

Nonetheless, the awareness of retirement planning is slowly gaining importance in India, especially post-Covid. A survey by PGIM India Mutual Fund, published last month, revealed that retirement planning had gained momentum after the COVID-19 pandemic, witnessing an 18 percent increase in the number of people planning for retirement. It also showed that the number of people not having a retirement plan dropped from 51 percent in 2020 to 33 percent in 2023.

While saving and investing during your working life is critical to building a retirement corpus, it is also essential to plan to earn regular income post-retirement after you hang your boots. The aim is to ensure that your retirement funds outlast your life span. To ensure this, you must determine the desired retirement corpus based on your lifestyle, health, and possible financial emergencies. You must also hold adequate liquidity in reserve besides ensuring regular cash flows.

Here are a few financial instruments you can explore for regular income:

• Senior Citizen Saving Scheme (SCSS): Individuals aged 60 and older can open the scheme with banks or post offices and invest up to Rs 30 lakh in a financial year. SCSS offers an 8.2 percent interest rate, payable quarterly. The government has recently made several changes to SCSS guidelines regarding extending the scheme in blocks of three years post-maturity indefinitely. Those seeking guaranteed income may opt for this government-backed scheme.
• Post Office Monthly Income Scheme (POMIS): One can open a POMIS account with post offices. This small savings scheme offers guaranteed monthly returns, a popular investment tool for senior citizens. POMIS interest rates are reviewed every quarter.
• Bank Fixed Deposits (FD): Bank FDs are other popular options for guaranteed income. Bank FDs generally offer 0.50 percent to 1.0 percent higher rates to seniors and super senior citizens. They provide flexibility in withdrawals and deposits—it is no surprise that they are a favorite tool among seniors. Interestingly, small finance banks offer higher rates than large banks.
• National Pension System (NPS): You can use NPS as a regular investment tool or for a pension. Under NPS, subscribers invest until the retirement age of 60. At retirement, they can withdraw 60 percent of the funds, and the remaining 40 percent must be used for buying an annuity plan to ensure regular cash flow. In October 2023, the Pension Funds Regulatory and Development Authority (PFRDA) changed the scheme, allowing subscribers to withdraw 60 percent of funds through the systematic lump sum withdrawal (SLW) facility until 75. So, individuals can decide whether to opt for regular flows or lump sum payments at retirement.
• Pension Plans: Insurance companies offer various pension plans for post-retirement income. People can contribute to the scheme while still working for a certain period. After completing the premium-paying term and the deferment period, if any, they can start receiving a pension. One can also avail of a loan facility against them during an emergency.