Top 5+ Best Saving Scheme for Senior Citizens & Pensioners

These days, senior citizens have been offered many proposals regarding their savings as well as funds. Yet, many senior citizens are not sure about which one to choose. There are various reasons for this. It might be because they are confused about which one to choose when they have so many options in front of them. Some of them also worry about their security and safety regarding their funds as well as finance. Henceforth, we have a proper guide of schemes to opt for savings.

All of these options listed below are quite popular and recommended as they ensure retreat for the saving treasuries. After they retire, they need to enjoy various bonuses which are provided through many investment schemes. Basically, senior citizens need less risk with their capital funds and more established assurance regarding their money. Many of the options do not provide much security but some of them assure much guarantee and are very much trustworthy. Let us take a look at the best options that are available for senior citizens in order to safeguard their capital funds.

  1. Senior Citizens Savings Scheme (SCSS)

Senior Citizens Savings Scheme (SCSS) is recognized as one of the best post office saving schemes considering senior citizens. This is safeguarded by the Government of India and hence, ensures full security. The latest SCSS interest rate from the period of January to March 2021 is 7.4%. The Ministry of Finance amends the interest rates regularly i.e. quarterly. Considering this interest rate, it is proved to be much beneficial for the senior citizens as it provides the exact amount calculated. Senior Citizens Savings Scheme has some policies that need to be followed strictly. Firstly, the minimum investment sum that needs to be paid is INR 1,000 and similarly, the maximum investment sum that needs to be paid is INR 5,00,000. Secondly, the period through which investment needs to be carried out is 5 years. If the investor desires, he can request to extend the period up to 3 years more which is helpful to many senior citizens. Here, the taxable sum is an account when the amount is more than INR 50,000, a TDS is subtracted from the total sum.

  1. Pradhan Mantri Vaya Vandana Yojana (PMVVY)

Pradhan Mantri Vaya Vandana Yojana (PMVVY) is also a scheme identified widely and much beneficial for senior citizens. This scheme is offering appropriate benefits for both retirements as well as pension plans. Pradhan Mantri Vaya Vandana Yojana (PMVVY) is fully operated by Life Insurance Corporation (LIC), which is also confirmed by the Government of India. Unlike the Senior Citizens Savings Scheme (SCSS), Pradhan Mantri Vaya Vandana Yojana (PMVVY) provides a duration of 10 years which enables people to invest thoroughly. Pradhan Mantri Vaya Vandana Yojana (PMVVY) also proposes a promised return with approachable interest. Further, the Government declared a change in the interest rate structure of the scheme. Primarily, the interest rate structure used to be constant for the whole duration of the investment. But lately, the Government has decided to proclaim the interest rates every year. Talking about the latest interest rate of March 2021, it was amended to about 7.4% every month. This concludes that the interest rate is approximately about 7.66% per annum throughout the duration of ten years. Additionally, Pradhan Mantri Vaya Vandana Yojana (PMVVY) pays pension on a regular basis at monthly, quarterly and yearly. Also, it is necessary for the investor to be above 60 years of age. The minimum deposit total to be deposited should be INR 1,50,000 and the maximum should be INR 15,00,000.

  1. Tax-free bonds

Tax-free bonds are the bonds that have been actually dispensed by the Government of India. These are further circulated by the government-approved organizations which include NTPC Limited, Housing and Development Corporation, NHAI, and Indian Railways Finance Corporation. The stretch through which tax-free bonds can be applied is 10 years. Actually, this is the minimum period and the duration can stretch up to 30 years depending upon the project. The interest rates are comparatively lower than the other schemes which vary between 5.5% to 6.5%. The maximum sum that can be invested in this program is up to INR 10,00,000. Tax-free bonds ensure maximum security as this scheme is financed by the Government and Government affiliated institutions. This is considered to be the most protective scheme as it proposes regular capital incomes as well as funds on a consistent basis. Eventually, this scheme has been booked under the Section 80C of the Income Tax Act, 1981. Tax-free bonds allow its depositors to buy and sell their respective bonds through the stock exchange market. Whatever the nominee profits from the bonds, they are reserved under Section 112.

  1. Senior Citizen FD

The Senior Citizen FD are considered the most conventional yet trustworthy plan for saving purposes. Most of the senior citizens out there prefer putting their income in FD rather than any other scheme. This system is so popular as they promise a fixed rate of interest and provide low risk. The rate of interest for FD ranges between 3% to 7%. When senior citizens deposit their money in FD system, the bank pays an added 0.5% rate of interest to their amount. Further, it is up to the senior citizens how and in which plan they want to invest in. There are two options in front of them which include getting the profit on a regular basis or at the end of the maturity period. If they go for the regular payment, they have to make their choice between monthly, quarterly, half-yearly and annually. Senior Citizen FD lies under Section 80C of the Income Tax Act, 1961. The financiers can obtain an amount up to INR 1,50,000 by the end of the maturity period. Although whenever the amount crosses INR 50,000, the bank tends to cut TDS of 10%. As the interest rates are low compared to other schemes, investors can deposit their desired income with no risk.

  1. Mutual Funds

Mutual funds are also prevalent for a long time now and basically, they loan a certain amounts from other depositors who possess related goals and altogether invest in equities as well as debt securities. There are many classifications that exist in mutual funds which include equity funds, hybrid funds and debt funds. As the name describes, equity funds majorly comprise of investing in equity assets whereas debt funds invest in debt as well as money market resources. Hybrid funds have the essence of both the equity as well as debt assets. Senior citizens can choose their preferred option and invest in it accordingly. In fact, senior citizens can capitalize through SIP too. They also have an option to try Systematic Withdrawals Plan (SWP). SWP permits the financiers to retract their income on a regular basis. Senior citizens can choose from options on which interval they want to receive their interest i.e. monthly, quarterly, half-yearly or annually.

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