Which is the best monthly income plan for senior citizens?
A senior citizen savings plan (SCSS) is a wonderful investing choice if you are a senior citizen and is the best scheme for monthly income. It is backed by the government, and only senior people (over the age of 60) are permitted to invest.
| S.No. | Investment Options | Returns |
|---|---|---|
| 1. | Senior Citizens Savings Scheme (SCSS) | 7.4% p.a. |
| 2. | Pradhan Mantri Vaya Vandana Yojana (PMVVY) | 7.4% p.a. |
| 3. | Post Office Monthly Income Scheme (POMIS) | 6.60% p.a. |
| 4. | Senior Citizen FD | 3% – 7% p.a. |
For individuals nearing or in retirement, investments such as bonds, annuities, and income-producing equities can offer additional retirement income beyond Social Security, a pension, savings and other investments.
- Fixed Deposit. Undoubtedly one of the best and most low-risk income schemes is a bank Fixed Deposit (FD). ...
- Post Office Monthly Income Scheme (POMIS) ...
- Long-term Government Bond. ...
- Corporate Deposits. ...
- SWP from Mutual Funds. ...
- Senior Citizen Saving Scheme.
Tax benefits under the SCSS
To sum it up, SCSS is a very good scheme for senior citizens who want a decent risk free return on a corpus fund. At 8.2% p.a. interest rate and an investment amount of Rs.30 lakh, the monthly income is stated to be Rs.20,500 per month for each investor.
| Bank | Tenure | Interest Rate |
|---|---|---|
| HDFC Bank | 7 days to 10 years | 3.00% to 6.25% |
| SBI Bank | 7 days to 10 years | 3.4% to 6.2% |
| Axis Bank | 7 days to 10 years | 2.50% to 6.25% |
| Kotak Bank | 7 days to 10 years | 3% to 5.8% |
SCSS Interest Rate
Senior Citizen Savings Scheme (SCSS) interest rates for the 4th quarter (January-March) of FY 2023-24 is 8.2% p.a. This is one of the highest interest rates offered by a fixed-income small savings scheme. SCSS interest rate is reviewed quarterly and is subject to periodic change.
As a general rule of thumb, you will withdraw approximately 5% of your retirement income every year for expenses. The Balance breaks down the numbers below: Start with $240,000 and multiply it by 5%, which equals $12,000. Next, divide $12,000 by 12 months, which totals $1,000 per month.
- High-yield savings accounts.
- Money market funds.
- Short-term certificates of deposit.
- Series I savings bonds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
Ideally, you'll choose a mix of stocks, bonds, and cash investments that will work together to generate a steady stream of retirement income and future growth—all while helping to preserve your money.
How much do I need to invest to make $1,000 a month?
The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets. And that's okay.
To earn ₹8000 to ₹10000 monthly from dividend income, you would need to invest a significant amount of money in dividend-paying stocks or mutual funds. The exact amount of money you need to invest will depend on the dividend yield of the stocks or mutual funds you choose.
Some experts recommend withdrawing 4% each year from your retirement accounts. To generate $500 a month, you might need to build your investments to $150,000. Taking out 4% each year would amount to $6,000, which comes to $500 a month.
At Unity Small Finance Bank, senior citizens can get up to 9.50 per cent on FDs of 1,001 days. The bank revised rates on February 2, 2024.
The ICICI Senior Citizen Savings Account also offers a higher interest rate than a regular savings account on the account balance in excess of Rs 75,000. It is important to note that the Senior Citizen Bank Account also offers secured returns and tax-saving benefits with Government-backed Senior Citizen Savings Scheme.
- Best Investment Plan for Senior Citizens.
- Senior Citizen Saving Scheme (SCSS)
- Pradhan Mantri Vaya Vandana Yojana.
- National Pension System (NPS)
- Equity Linked Savings Scheme (ELSS)
- Senior Citizen Fixed Deposits.
- Why is Investing for Senior Citizens Important?
Monthly income plans are a great way for investors to ensure they get a steady income stream. Well-suited for retirees and older investors, these plans pay investors dividends and interest income by primarily investing in lower-risk assets like debt securities. A smaller position in equities offsets this.
| Time Interval | POMIS Interest Rate (Per Annum) |
|---|---|
| 1st April 2023 - 30th June 2023 | 7.40% |
| 1st January 2023 - 31st March 2023 | 7.10% |
| 1st October 2022 - 31st December 2022 | 7.10% |
| 1st April 2020 – 30th September 2020 | 6.60% |
The Post Office Monthly Income Scheme (POMIS) is a Government of India backed small savings scheme that allows the investor(s) to set aside (save) a specific amount every month. Subsequently, interest is added to this investment at the applicable rate and paid out to the depositor(s) on a monthly basis.
IndusInd Bank:
Seniors can avail the highest interest of 8.25 per cent for three tenures: 1 year to below 1 year 6 months, 1 year 6 months to below 1 year 7 months, and 1 year 7 months to up to 2 years. The interest is 8.00 percent for tenures between more than two years and below 61 months.
What is the current senior citizen interest rate?
The deposit made under these rules shall bear interest as directed by Govt of India from time to time quarterly. At present it is 8.20% per annum with effect from 01.04.2023.
The scheme doesn't provide options for regular adjustment of income based on inflation or cost of living increases. Withdrawals before the scheme's maturity come with penalties, reducing the overall return. SCSS pays interest quarterly, without an option to reinvest the interest for compound growth.
Top the amount with 401(k) savings, living on $3,000 a month after taxes is possible for a retiree. For those who only have social security benefits to rely on, there are many places where they can retire on their checks both in the USA and around the world.
With $800k initially saved, you could withdraw $40k-60k annually and still have your portfolio last between 19-28 years. The higher your spending amount, the faster your savings get depleted.
According to the survey, Americans believe that they would need an estimated $5,000 per month to have a comfortable retirement. For those who don't have enough saved, relocating to cheaper destinations is one solution. For instance, West Virginia is the state with the lowest cost of living for retirees.
