“A retired husband is twice the husband at half the salary.”

 
Once a person retires from active business, he finds it difficult to maintain the same lifestyle or at times, even to make both ends meet.

However, this can be mitigated if you invest wisely during your working life — planning it such that you receive a suitable amount of money on retirement.

Financial independence becomes more significant in these times when children do not fend for the parents — sometimes out of compulsion, sometimes out of choice. Moreover, parents also find it embarrassing to ask for money from their children.

It is advisable you start thinking about retirement in, say, your early 30s. Do not think that you still have lot of time to retire and therefore, can plan later — sooner the better in this matter.

Also, after retiring from your active earning career, your ability to take risk on financial front almost becomes nil, therefore you should invest your money carefully and wisely otherwise you may loose the savings of a lifetime. There have been numerous cases where people took voluntary retirement and then burned their hands by speculating in stocks or invested the same in some business ventures and lost the all the money. Today, these ‘retired’ people are burdened with debts.

Let us now have a look at investment options for retired people and have received a lumpsum such as gratuity or provident fund dues. These investments will ensure a reasonably good income every month, while ensuring the safety of your capital. Here I am not referring to retirement planning, but planning for a risk-free flow of income to meet your day-to-day expenses post retirement.

Senior citizen scheme: You can invest up to Rs 15 lakh in this scheme. Any person who has completed the age of 60 years can open a senior citizen saving account with the post office, State Bank of India or specified branches of nationalised banks.

People who have taken voluntary retirement and whose age on VRS is 55 years or higher too qualify for this scheme. Interest is paid at 9% p.a. In case both you and your wife are above the age of 60, you can invest up to Rs 30 lakh in aggregate. This investment of Rs 30 lakh will fetch you monthly interest income of Rs 22,500. The money is required to be deposited for a period of 5 years.

Interest under this scheme is paid quarterly in March, June, September and December. You can furnish the bank form No 15G or 15H for non-deduction of tax on such interest in case your total income is not taxable.

Post Office Monthly Income Plan: Here, you can invest up to Rs 4.50 lakh per head and in case of joint account, you can invest up to Rs 9 lakh at 8% p.a.

There is no age restriction for this investment, but there is lock-in period of 6 years. On maturity, you receive a maturity bonus of 5% of the amount deposited. This investment of Rs 9 lakh will give you a monthly income of Rs 6,000 per month. There is no tax deduction of income tax on such interest.

Cash leftover still? The above two investments can bring you a monthly income of Rs 28,500 on investment amount of Rs 39 lakh.

Part of the balance amount can then be invested in fixed deposits (FD) in various banks which give cash interest on monthly basis. Presently, the interest rates vary between 7% and 8% p.a. if invested over a period of two years.

Moreover, the banks give an additional 0.50% interest to senior citizens. These FDs will give you flexibility as you can withdraw the money prematurely at an interest penalty of 1%.

It is advisable that you open a few FDs of varying amounts so that in case of any emer-gency, you can prematurely withdraw only that FD which will cover your needs, rather than having to break a big FD and bear penalty.

If you are still left with some money, you can invest the same in mutual funds which will fetch you higher returns as compared to a bank FD. This will help you in enhancing the fixed flow of income by taking inflation into account.

The writer is CFO, ApnaPaisa.com, a pricecomparison engine for loans, insurance and investments. He can be reached at balwant.jain@ apnapaisa. com

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