Best Investment Plan for Retirement

Becoming financially independent post-retirement is one of the most important financial goals an individual seeks. It has always been encouraged to start investing as early as possible, to make your savings last during retirement.

An overview of investment plans for retirement

The percentage of senior citizens in India is proliferating, and it is expected to reach 20% of the overall population in 2050. As the older people population continues to increase, one of the growing concerns for them is retirement savings.

It is paramount that you think of investment options that could help you build a corpus for life, and protect you against the imminent inflation that comes with it. For retirees, they must make the best use of a corpus that allows them to save taxes and earn a regular stream of income.

Best investment plans for retirement

If you are looking for the best investment plans for retirement, you can consider the following options:

NPS – National Pension Scheme

An initiative by the Central Government of India and the Pension Fund Regulatory and Development Authority (PFRDA), NPS is a long-term investment plan for retirement. A subscriber can regularly invest during his/her working life, withdraw a corpus in a lump sum and use the rest of the corpus to invest in an annuity to procure regular income for retirement. Any Indian citizen in the age of 60 can subscribe to NPS.

SIP – Systematic Investment Plan

SIP is one of the best ways to invest in mutual funds for retirement planning. Private sector employees often plan for their retirement with SIPs as it helps to accumulate and compound wealth affordably. SIP is a systematic approach to investing in mutual funds. There is no minimum requirement for SIP investment.

PPF – Public Provident Fund

PPF is a long-term, government-backed investment plan that offers an attractive interest rate and returns. You can open a PPF account at any nationalised bank or post office. It has a minimum tenure of 15 years, and you can start investing as low as Rs.500. PPF offers risk-free returns. Any Indian citizen can invest in PPF, except for HUF (Hindu Undivided Family) and NRIs (Non-Resident Indians).

FD – Bank Fixed Deposits

This is a trusted investment plan that has existed for a long time in India. The long-term account allows you to deposit lump sum money for a fixed period and offers assured returns. The interest rate is fixed at the time of opening the account, and it remains the same throughout the tenure. The account offers guaranteed returns. As compared to standard FD schemes, senior citizens are eligible for higher interest rates that range from 3.50% to 8.50%.

Tax-free Bonds

These are long-tenure bonds wherein the maturity period ranges from 10 to 20 years. It is an ideal retirement investment plan that fares well as against the debt funds and fixed deposits. These bonds are recommended for those looking for regular income during the retirement phase.

SCSS – Senior Citizens’ Saving Scheme

Banks and Post Offices offer SCSS, which has a 5-year investment plan. However, you can also extend it for an additional three years. As compared to all other fixed income tax products, SCSS offers the highest post-tax returns. This scheme is available only for senior citizens and to early retirees.

Post office monthly income scheme

POMIS is a highly reliable investment product under the purview of the Finance Ministry. It is a low-risk plan that guarantees steady income generation. The plan has a maturity period of 5 years, and you can start investing in it with an initial investment of Rs.1500. You can visit the nearest post office to initiate POMIS. Any Indian citizen can open a POMIS account. All the investment plans, except for POMIS & Tax-free bonds, are subject to tax-benefits.