Are you looking for the best monthly income schemes for Senior citizens in India? Choosing the right investment plan ensures regular income, capital protection, and tax efficiency.
Here are the best ways to earn a regular monthly income after retirement. These 10 proven investment options for senior citizens in India will help you pick smarter investment options.
Table of Contents
Best Monthly Income Schemes for Senior Citizens in India
Here are the some best Investment options for retirees in India.
1 Senior Citizens Savings Scheme (SCSS)
Senior Citizen Saving Scheme is a Central Govt. Of India scheme with assured quarterly income. SCSS is probably the best Monthly Income Scheme for Senior Citizens in India, due to its sovereign guarantee, fixed payout and safety of principal.
Just deposit a lumpsum amount for 5 years and enjoy quarterly payouts. Interest rate is locked at the beginning of purchase.
SCSS is widely available in all Indian Post Office, major PSU banks and few private banks like ICICI, HDFC, SBI, Axis etc.
SCSS is available for seniors only or after retirement. Check who can buy Senior citizen Saving scheme
Few of the salient features of SCSS:
- Best For Fixed income with government security
- Interest Rate Around 8.2 percent
- Tenure 5 years that can be extended for 3 more years
- Tax Benefits Up to 1.5 lakh deduction under Section 80C
- At maturity deposited amount is refunded.
Why Choose SCSS?
- Easily accessable
- High interest rate
- Guaranteed quarterly payouts, and
- government backing makes it a preferred choice for retirees.
2 RBI Floating Rate Bonds
RBI Floating Rate Savings Bonds (FRSBs) are issued by the Reserve Bank of India (RBI) on behalf of the Government of India. RBI Floating rate bond can be the next best monthly income scheme for senior citizens.
RBI bonds interest rate is linked to the National Savings Certificate (NSC) rate, with a 0.35% spread. For example, if the NSC interest rate is 6.8%, then RBI bonds can be procured at 7.15%.
It is best for assured interest payments.
Just deposit a lumpsum amount and enjoy half-yearly payouts from the RBI floating bonds.The interest on the bonds is payable semi-annually on 1st Jan and 1st July every year.
The coupon on 1st January 2024 shall be paid at 8.05%. The Interest rate for next half-year will be reset every six months, the first reset being on January 01, 2025.
There is no option to pay interest on a cumulative basis.
Salient features of RBI Floating rate bonds:
- Best For Pension with an assured return
- Interest Rate Around 8.05 percent
- Tenure 7 years
- Investment Limit 15 lakh
- Best For Fixed income with government security
- At maturity deposited amount is refunded.
Why Choose RBI Floating rate bonds?
RBI Floating rate scheme provides a guaranteed pension, making it ideal for stability.
Read more about RBI Floating rate bonds
3 Fixed Deposits (FD) for Senior Citizens
Almost all banks provide Senior citizens fixed deposits. These FDS are best For Safe guaranteed returns. Although returns from fixed deposit is low but still FD is another best Monthly Income Schemes for Senior Citizens in India.
One can invest in FD for security and contingency purposes.
- FD Interest Rate range between 7 to 8.5 percent varies by bank
- Tenure 7 days to 10 years
- Higher interest than regular FDs
Why Choose It?
Senior Citizen FD Offers stable returns and monthly or quarterly payout options help with regular income.
4 Post Office Monthly Income Scheme (POMIS)
Post Office Monthly Income Scheme is best For Monthly income with low risk. POMIS is available with all post offices. POMIS is widely available in all post offices in India.
- Interest Rate Around 7.4 percent
- Tenure 5 years
- Investment Limit -9 lakh for single account, 15 lakh for joint account
- At maturity deposited amount is refunded.
Why Choose It?
A government-backed scheme that provides guaranteed steady monthly income.
Read more about Post Office Monthly Income Scheme
5 Mutual Funds Debt and Hybrid Funds
Monthly income plans are a mutual fund type, usually called hybrid funds.
These schemes objective is to preserve capital and generate cash flow.
Monthly income plans are primarily debt funds with a higher allocation to debt ( 60%-70%) and lower equity allocation. These schemes aim to get a stable return while saving the capital.
A MIP often invests in lower-risk securities, including fixed-income instruments, preferred shares, and dividend stocks.
Key features of MIP
- Best For Higher returns with moderate risk
- Low to moderate risk as funds invest primarily in debt securities
- better return than FD due to some alloca
- Expected Returns Between 6 to 10 percent that is market-dependent
- Why Choose It Mutual funds provide inflation-beating returns, especially if invested in a well-balanced portfolio.
Learn how to generate monthly income using SWP.
6. Annuity Plans Immediate and Deferred
Annuity plans from insurance companies provide fixed guaranteed income to pensioners. These pension plans can be categorised as immediate annuity plans and deferred Annuity plans.
Key features of Annuity Plans
- Best For Guaranteed pension-like income
- Offered By LIC, ICICI, HDFC, SBI, and other insurers
- Payout Frequency Monthly, quarterly, or yearly
Why Choose it?
Ensures a steady income for life, protecting against longevity risks.
Read about some annuity plans/ Pension plans
LIC Smart Pension Plan Benefits & Review
ICICI Prudential Guaranteed Pension Plan Flexi- Should you buy?
Exploring SBI Pension Plan for a Secure Retirement
7 Gilt Mutual fund
These mutual funds invest mostly in government bonds. Government bonds are considered the safest investment in the country. These funds are suitable for investors who want to invest money for a longer duration but their first and only priority is the safety of their investments.
Key features of Annuity Plans
- invest mostly in government bonds.
- Gilt fund aims to generate income primarily through investment in Gilts of various maturities.
- Return ranges between 6%-10%.
- Safe for monthly income
Why Choose It
Government and AAA-rated bonds offer security with better returns than FDs.
8 Tax Free Bonds
For safe half-yearly income, money can be invested in Govt issued bonds.
Key features of Bonds
- Best For Long-term income
- Best investment for capital gain tax saving
- Issued By PFC, REC, NHAI, IRFC, and other government entities
- Interest Rate Between 5 to 6 percent tax-free
Why Choose It
Unlike FDs, the interest earned is tax-free, making it more lucrative for high taxpayers.
9 Real Estate REITs and Rental Income
Rental income is best for Passive income or real estate growth. you can invest in good projects and derive monthly rental income. For rental income you may consider buying property for rent, Real Estate Investment Trusts REITs.
Key Features of REIT & Rental Income
- Returns Between 6 to 9 percent from REITs, rental income varies
Why Choose It
REITs provide real estate exposure with liquidity, while rental properties ensure monthly income.
10 National Pension System NPS Senior Citizens
If you require tax deduction under section 80 C and want pension in near future NPS can be used.
Key Features of NPS
- Best For Retirement corpus with tax benefits
- Tax Benefit Up to 50,000 deduction under Section 80CCD1B
- Pension Lifetime pension with annuity investment
- If you have not planned early, NPS helps build a retirement corpus even after 60.
How to Choose the Top Investment Plan for senior citizens in India
Selecting the best investment depends on many factors, such as the duration of the investment, risk appetite, tax benefit, lock-in time, liquidity, and others.
Let’s focus on the basic and most important factors before you invest in any top investment plan:
- safety of capital
- regular income ( if required)
- Liquidity
- Tax Benefit
- Tax on maturity
- peace of mind.
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