Published Jul 11, 2025 4 Min Read

Retirement may mean the end of your job, but it doesn’t mean the end of your tax responsibilities. From pension and FD interest to capital gains on investments, your income sources shift—but the taxman still keeps track.

Effective tax planning after retirement ensures your savings last longer, your returns stay healthy, and you don’t get caught off guard by surprise deductions.

Want high returns on your savings after retirement?
Invest in Bajaj Finance Fixed Deposits with tenures up to 60 months. Senior citizens enjoy interest rates up to 7.30% p.a. and higher exemption limits. Open FD

5 retirement tax planning strategies that actually work

1. Know what’s taxable

Don’t assume everything post-retirement is tax-free. Here’s what typically gets taxed:

  • Pension income (except commuted pension)
  • Interest from FDs, savings accounts, and bonds
  • Capital gains from mutual funds, stocks, and real estate

Get familiar with Sections 10(10A), 10(10D), and 80TTB to understand exemptions that apply to retirees.

Want regular payouts for day-to-day expenses?
Choose a non-cumulative FD from Bajaj Finance—get monthly, quarterly, or annual payouts while managing your tax brackets efficiently. Open an FD account with as low as Rs. 15,000.

 

2. Optimise your investment mix

Tax-saving doesn’t stop at 60. Diversify your portfolio with these instruments:

  • PPF: Tax-free interest and maturity under Section 80C
  • SCSS (Senior Citizen Saving Scheme): 5-year government-backed plan with quarterly payouts
  • Tax-saving FDs: 5-year lock-in under Section 80C
  • ELSS: Equity-linked savings schemes with Rs. 1.5 lakh deduction and growth potential

 

3. Leverage deferred annuities

A deferred annuity lets you build a retirement corpus now and start receiving income later—usually when you hit your 60s. Taxes are applied only once payouts begin, helping you stay within lower tax slabs.

Combine this with a smart FD ladder strategy to balance liquidity and tax exposure.

Planning liquidity across retirement stages?
Use an FD laddering strategy with Bajaj Finance—split your deposit across different tenures to access funds gradually and reduce tax impact. Check latest FD rates

 

4. Maximise senior citizen benefits

Once you turn 60, the government rewards you with higher tax exemptions:

  • Basic exemption limit increases to Rs. 3 lakh
  • Deduction up to Rs. 50,000 on FD/savings account interest under Section 80TTB
  • Higher deduction limits for medical insurance under Section 80D

Use these smartly to reduce your taxable income each year.

Want fixed returns without market volatility?
Invest in Bajaj Finance FDs with flexible tenures ranging from 12 to 60 months. Avoid equity-linked risk and enjoy predictable returns of up to 7.30% p.a. Open FD

 

5. Plan your withdrawals wisely

Instead of cashing out large chunks, spread your withdrawals over financial years. This helps you:

  • Stay in a lower tax bracket
  • Reduce TDS deduction on interest or capital gains
  • Avoid premature FD withdrawal penalties

Mix income from tax-free instruments (like PPF maturity) with taxable ones to create a balanced, tax-efficient cash flow.

How are retirement taxes calculated?

In India, taxes on retirement income are calculated based on total taxable income—which includes pension, annuity payouts, capital gains, and interest. However, these smart exemptions can help:

  • Section 10(10A): Commuted pension
  • Section 10(10D): Life insurance payouts
  • Section 80TTB: Rs. 50,000 interest deduction for senior citizens
  • Section 80C: Up to Rs. 1.5 lakh for select investments like PPF, ELSS, FDs

The more you optimise your sources, the less tax you pay.

 

Also Read: Tips for Successful Retirement Investing

Conclusion

Smart tax planning is not just a pre-retirement activity—it’s a crucial part of your golden years. With the right mix of instruments, withdrawal strategies, and senior citizen benefits, you can protect your savings, beat inflation, and live comfortably without worrying about taxes.

And while you plan your peace of mind, let your money work harder for you. Explore Bajaj Finance Fixed Deposits—designed for guaranteed income, better returns, and easy liquidity during retirement. Book an FD and get up to 7.30% p.a. returns.

 

Calculate your expected investment returns with the help of our investment calculators

Investment Calculator
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Frequently Asked Questions

What is the best tax strategy for early retirement?

The best tax strategy for early retirement is to start investing early in tax-saving instruments like PPF, ELSS, and NPS. Spreading withdrawals across financial years, using deferred annuity plans, and keeping taxable income within lower slabs helps reduce tax liability. Planning asset allocation between tax-exempt and taxable sources ensures steady income with minimal tax impact.

What is the purpose of tax planning for retirement income?

The purpose of tax planning for retirement income is to maximise post-retirement earnings by reducing tax liabilities. It helps in selecting the right investments, scheduling withdrawals wisely, and taking advantage of exemptions. Effective planning ensures you retain more of your income, manage expenses smoothly, and achieve financial stability throughout your retirement years.

What is the best low-risk investment option for retirees?

Fixed Deposits are ideal—especially with Bajaj Finance offering high interest rates, flexible tenures, and dedicated senior citizen benefits. Get up to 7.30% p.a. returns on Bajaj Finance FDs, Invest now!

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.