There is no escaping retirement as we will all reach an age when we must hang our boots. This phase of life requires careful planning and financial security. As of 2022, 10.5% of individuals aged 60 years and above were in India. However, by 2050, this older population is expected to double, reaching 20.8%,
So there’s a likelihood that your parents will join the club, or perhaps you will reach that age. Unfortunately, a considerable segment of the population ends up in old age homes because of poor financial planning at an early age.
If you are looking for ways to help your parents plan their retirement, consider some of the best investment options available in India. These can provide regular income, capital appreciation, tax benefits, and safety for your parents’ hard-earned money.
Here are some of the best investment options for senior citizens in India:
1. Senior Citizen Savings Scheme (SCSS): This government-backed savings scheme offers a high-interest rate of 8.2% per annum, payable quarterly. It has a minimum tenure of 5 years, that can be extended by another 3 years. The maximum investment can be Rs. 30 lakh for individual or joint account holders.
| Senior Citizen Savings Scheme (SCSS) | Particulars |
| Tenure | 5 years |
| Interest Rate | 8.2% p.a. |
| Minimum Investment | Rs 1,000 |
| Maximum Investment | Rs 30,00,000 |
| Tax Benefits | Available under Section 80C upto Rs.1.5 lakh |
| Premature Closure | Available |
| Nomination Facility | Available |
The interest income is taxable, but the investment amount is eligible for deduction under Section 80C of the Income Tax Act up to Rs.1.5 lakh. SCSS is a safe and reliable option for senior citizens who want regular income and tax benefits. If you invest Rs. 40,000 a quarter in it for 5 years, you’ll save Rs. 8 lakhs in your parent’s retirement, which will grow into Rs. 9.72 lakhs.
2. Pradhan Mantri Vaya Vandana Yojana (PMVVY): A pension scheme for senior citizens aged 60 years and above. The scheme offers a guaranteed under 8% annual return for 10 years, payable monthly, quarterly, half-yearly, or yearly.
The minimum investment amount is Rs. 1.5 lakh, and the maximum is Rs. 15 lakh. The pension income is taxable, but there is no TDS. PMVVY is a good option for senior citizens who want a fixed and assured pension for a long duration. It provides similar benefits as the previous scheme but with higher returns in the longer run as the tenure is longer.
3. Tax-free bonds: These are bonds issued by government-owned entities like NHAI, IRFC, PFC, REC, etc. that offer tax-free interest income. The interest rate varies depending on the issuer, tenure, and market conditions, but it is usually higher than bank FDs. Providing around 7 to 8% returns at the end of the tenure.
The bonds have a long maturity period of 10 to 15 years and can be traded in the secondary market. Tax-free bonds suit senior citizens who want to earn tax-free income and capital appreciation.
4. Debt mutual funds: These mutual funds invest in fixed-income securities like government bonds, corporate bonds, money market instruments, etc. Debt mutual funds offer higher returns than bank FDs and also have the benefit of indexation, which reduces the tax liability on long-term capital gains.
Debt mutual funds have different categories based on the underlying securities’ duration, credit quality, and risk profile. Senior citizens can choose debt mutual funds that match their risk appetite, liquidity needs, and investment horizon.
In the last five years, the debt funds have shown an average of 15% annual growth, so if you had started a SIP of Rs 1,000 a month five years ago, you would have saved Rs 60,000, which would have grown into Rs 89,682.
5. Equity mutual funds: Mutual funds that invest in companies’ equity shares are equity mutual funds. These funds have the potential to generate high returns in the long run, but they also carry higher risk and volatility.
Equity mutual funds suit senior citizens with a high-risk tolerance, a long-term investment horizon, and a diversified portfolio. They also offer tax benefits, as long-term capital gains up to Rs. 1 lakh are exempt from tax, and the dividends are tax-free for the investors.
Equity funds have a higher risk when compared with debt funds but are equally rewarding; in the last 5 years, it has provided 19% returns annually, so the Rs 60,000 in the previous example would have grown into Rs 1 lakh if it had been invested in an equity fund.
These are some of the best investment options for senior citizens in India that can help them achieve their retirement goals. However, before investing in any of these options, it is advisable to consult a financial advisor and do proper research.
Investing in your parents’ retirement is a smart move and a gesture of love and gratitude. It will also enable them to lead a life of dignity in their golden years. The key is to start investing as soon as possible to get the most out of the investments!
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
Know more about
SIP CALCULATOR | RETIREMENT CALCULATOR | CAGR CALCULATOR | FINANCIAL CALCULATORS
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.