How to use popular saving instruments to generate regular income for retirees?
One of the biggest worries of elders (above 60), who don’t have the security of a pension, is how to generate regular income for the rest of their lives. The other big problem is to ensure that the portfolio continues to grow (and beat inflation) and increase the portfolio longevity.
But in this article, let’s focus on income generation first.
Three useful low-risk instruments that can come in very handy in income generation for senior citizens are the Senior Citizen Savings Scheme (SCSS), Post Office Monthly Income Scheme (POMIS) and RBI Floating-Rate Savings Bond (FRSB).
Let’s see how these can be used together to generate income.
Senior Citizen Savings Scheme: SCSS allows a person above the age of 60 to invest up to ₹30 lakh and generate 8.2% in annual interest income. This translates to about ₹2.46 lakh annually or ₹20,500 monthly. A senior citizen couple can together earn about ₹41,000 monthly in SCSS interest income if both can park ₹30 lakh each in their individual SCSS accounts.
Do note that while the current rates are high at 8.2%, the good thing is that the rate at the time of making SCSS deposit is fixed for the entire tenure of 5 years, even though SCSS gets reviewed by the government. every quarter. The tenure of SCSS is 5 years and one can extend it for 3 more years at the then prevalent rates.
Post Office Monthly Income Scheme: POMIS is another safe interest-bearing instrument which allows one to invest ₹9 lakh per person. The current rate of interest is 7.4%. So, if the husband and wife together park ₹18 lakh (in two individual accounts of ₹9 lakh each) in POMIS, then together, the senior couple can generate about ₹1.33 lakh yearly or ₹11,100 monthly in interest income. The POMIS too has a tenure of 5
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