What Are the Investment Options for Pensioners and Senior Citizens

Investment strategies change as we age, and our goals evolve according to the different life phases. While one can afford to be aggressive in the early days, as you approach retirement, it’s best to slow things down. For senior investors, the focus shifts to generating a consistent income stream from investments, ensuring that their retirement corpus is sustainable throughout their retirement years. Therefore, pensioners and seniors tend to prefer liquid, low-risk investments. This article outlines the best investment options for senior citizens to enjoy a secured post-retirement life and financial independence,

• SCSS offers high interest on lump-sum deposits of up to Rs. 30 lakhs.
  

• Fixed deposits and POMIS investments offer capital safety and monthly payouts.

• Debt mutual funds and NPS offer market-linked returns for seniors who are more comfortable with risks.

Here’s a list of the best investment plans for senior citizens:
 

SCSS

The Senior Citizen Savings Scheme (SCSS) is one of the best investment options for senior citizens above the age of 60. This government-backed retirement benefit scheme allows seniors to invest a lump sum of Rs. 1,000 to up to Rs. 30 lakhs and earn a predetermined interest on a quarterly basis. In other words, interest is credited on the first day of April, July, October, and January. Currently, SCSS interest rate stands at 8.2% p.a. The scheme comes with a 5-year tenure with the option to extend the investment by 3 years. Seniors can also exercise the premature withdrawal and closure clause. However, penalties may be applicable depending on when the account is closed.
 

Fixed deposits

As safe and reliable investments, fixed deposit accounts are preferred by most retirees and senior citizens. Seniors can invest a lump-sum amount in FDs to earn a fixed rate of interest during the selected duration. Banks generally offer higher interest rates for seniors than regular depositors. Depending on their needs, seniors can choose different time horizons. Additionally, they can select the non-cumulative FD option, which offers a steady income flow that helps them manage their expenses. All this makes this guaranteed return investment product one of the best investment options for senior citizens.
 

Post office monthly income scheme (POMIS)

POMIS is another great fixed-interest investment option for senior citizens. Investing in POMIS offers seniors complete capital safety and a fixed monthly interest payout. Senior citizens and retirees can invest in POMIS with a minimum investment of Rs. 1,500 by visiting their nearest post office. If seniors open joint POMIS accounts, they can deposit up to a maximum of Rs. 15 lakhs. For individual accounts, the cap is set at Rs. 15 lakhs. POMIS investments come with a 5-year tenure, but seniors reserve the right to renew the investment for 5 more years. The negligible risks associated with POMIS, plus the allure of a steady monthly income to meet living costs and medicine expenses, make the scheme one of the best investment options for seniors.
 

Debt mutual funds

Senior citizens and pensioners with a slightly higher risk tolerance can opt for debt mutual funds. Debt funds invest in fixed-income securities like government and corporate bonds, debentures, treasury bills, and commercial papers. Seniors can start investing in debt funds with a nominal SIP amount of Rs. 500 or opt for the lump-sum route. While riskier than FDs, SCSS, and POMIS investments, debt funds offer higher returns. Primarily, debt funds are susceptible to credit and interest rate risks. Credit risk can be managed by investing in funds that invest in high-credit-rated instruments. For instance, debt funds that invest in government bonds and T-bills are considered safer than ones that invest in junk bonds because the government is less likely to default on payment obligations. Additionally, debt funds offer easy liquidity benefits to seniors since they can withdraw from the investment easily to meet emergencies. In simple words, the minimum risk exposure of debt funds allows seniors to tap into market gains without risking heavy losses due to market volatility. This makes debt funds one of the best investment options for senior citizens.
 

NPS

NPS, or the National Pension Scheme, is a prudent investment option for senior citizens and pensioners. While it’s best to start an NPS investment early, according to the revised joining rules, seniors up to the age of 70 can open an NPS account. Seniors investing in NPS can opt for the auto and active choice allocation options. The auto choice option determines the asset allocation mix based on their age, while the active choice option allows seniors to allocate up to 50% of their funds in equities.

While we’ve listed all the best investment options for senior citizens, the final choice is based on your needs. The best investment plan for you will be one that can sufficiently meet your post-retirement needs, like financing your monthly expenses and protecting your lifestyle. Additionally, the best options should fit your risk appetite, investment horizon preference, and payout frequency requirements as well. You can review these 5 best investment options for seniors to make an informed choice.
 

If you are looking for safe investment option, then you can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 8.85% p.a.