Most people start thinking about their retirement period the moment they step into a new job. And they do it with good reason too.
Retirement can be scary if you don’t know what to do. Firstly and most importantly, even if your job entails a pension, you will be earning significantly less than what you had been for so many years. This sudden drop in your annual income may require you to cut down expenses and adopt a simpler and more basic lifestyle. Also, your retirement fund can only last for so long, and there is a high chance that you may outlive your retirement funds.
However, Take A Look Around. Does Every Retired Person Live An Austere Life?
The answer is no. Many of them continue to earn as much as they used to, or maybe even more than that.
How Do They Do It?
Simple. Smart investment plans post retirement.
Here are 6 Plans and Schemes for Senior Citizens on how to invest retirement money
Senior Citizens’ Saving Scheme
The Senior Citizens’ Saving Scheme (SCSS) is a popular choice amongst both Senior Citizens and early retirees. If you are above the age of 60, you can avail this scheme from any local bank. For early retirees, the SCSS must be activated within a year of their retirement. Initially, the SCSS works for five years and can be extended for another three years upon maturity.
SCSS has an 8.6 percent per annum return rate, which is payable either quarterly and is fully taxable. The rates are set and linked to the current G sec rates on the basis of 100 points. The rates remain fixed for the entire time after the investment.
You can invest a maximum of 15 lakhs, and can also manage more than one account. The investment can earn tax benefits, under the bylaw in Section 80C. You can also withdraw your amount before the completion of the term.
Post Office Monthly Income Scheme (POMIS)
This five-year investment plan allows maximum ownership of 9 lakh under the dual ownership and 4.5 lakh under single ownership. A 7.8 percent interest rate is set upon the investment, which is payable quarterly. You will receive no tax benefits on your POMIS investment, and the interest you will earn is fully taxable.
In case you decide to open a POMIS account, you will not be required to take a trip to the post office at regular intervals. Instead, you can open a savings account in the same post office- your interest will be credited there. You can also have a recurring account in the same post office which will receive the interest once it is transferred from the savings account.
Rental Real Estate
You can buy property with your retirement money, but the only drawback to this scheme is that it requires a lot of maintenance expenses. But, if you are in the position o bear these unanticipated expenses, chances are that you will gain good returns. Do not go into the real estate business without doing proper research. It is a risky business, so make sure that you know enough not to be duped or cheated out of your hard earned money.
Income Producing Close End Funds
The purpose of close-end funds is to produce monthly or quarterly income. If you have some experience in investing, you may find closed-end funds pretty satisfactory. The interest on closed-end funds can come from dividends, covered calls, stocks, bonds and a whole variety of different sources depending upon the type of the fund.
Annuity schemes are also quite popular amongst retirees. The purpose of an annuity is to provide a regular income against a lump sum investment. This process continues until the tenure f the scheme ends, or the investor meets his death. At the end of the accumulation period, the final sum will be divided into two- one-third of the amount will be paid, while the remaining two-thirds become further annuities.
Instead of earning more now, your aim should be to save what you have. That’s why you should always reserve some of your investment money in an emergency fund or something alike. Do not make a rash decision about your money. If you are confused about how and what to invest it in, keep it in a safe investment for a short while only if you don’t want your money in the bank for too long.
These are only a few of the many paths you can take to ensure that your money is being put to good use. Always conduct thorough research before adhering to any one retirement investment option. Read up on books or ask some who has your best interests in mind.
Your first and foremost concern should be the safety of your money and the durability of the plan or scheme. If you know how to invest retirement money in any other means, please do share with our readers through comment section below.