Senior citizens often look for suitable investment avenues to maximize their corpus post retirement. A comfortable retirement to sustain daily life is what they look for with attractive interest rates which will also generate a regular and secure income. This is where a Senior Citizen Saving Scheme (SCSS) comes into the picture.
On the other hand, an FD or fixed deposit for senior citizens can be an attractive investment option too. It provides stability as well as safety of your principal amount and you do not suffer any potential loss. You can take direct control of your investments with guaranteed returns.
What is the senior citizen fixed deposit scheme?
Senior citizen fixed deposit scheme is launched especially for retirees for their post-retirement benefits. It is primarily a long-term saving scheme which offers the investor a regular income with monthly, quarterly, half-yearly or yearly interest payout options.
However, if you are looking for where to invest for higher returns on your fixed deposit, you need to have prior understanding of the same altogether. This will give you an overview of the possible returns and also a comprehensive framework of how such schemes work.
What is the Senior Citizen Savings Scheme?
The savings scheme for senior citizens is launched by the government to provide regular income to retirees. The safety and certainty involved in investing in this scheme has made it highly preferable among individuals.
Before investing in any of the two schemes, you may take assistance from an online fixed deposit Interest rate calculator for your convenience.
Comparison between fixed deposits for senior citizens and SCSS
The crux of investing in FD is its stability. Besides, there are other benefits as well that are discussed below –
- Interest rates
Fixed deposit scheme offers an additional 0.35% interest rate to senior citizens, which is why it has been one of the most favoured choices of retirees. On the other hand, with senior citizen saving scheme, you can enjoy a varied interest rate of 8.70% in the first quarter with 8.35% during the next 3 quarters.
You can expect better returns through FD scheme, which you can opt to receive in regular intervals or upon maturity as per your requirements. In this regard, you can opt for a Bajaj Finance Fixed deposit scheme for senior citizens.
- Premature withdrawal
Investing in fixed deposit eases the withdrawal process. You can withdraw your amount in case of emergencies against a negligible penalty fee. On the contrary, through Senior Citizen Savings Scheme, you are liable for a deduction equal to 1.5% of the deposit amount in case of premature withdrawal before 2 years. Additionally, 1% of deposit is deducted in case of non-completion of 5 years.
Opening of a fixed deposit account is simple and hassle-free. You can even do the same online. On the other hand, for Senior Citizen Savings Scheme, the investment has to be made in multiples of Rs. 1,000, and only allows a maximum investment of Rs. 15 Lakh.
You can additionally use a fixed deposit interest rate calculator to understand the generated income before investing. It will give you a clearer picture of the returns.
- Application process
The application procedure is also made quite convenient for the individuals as they do not have to go through a long process. You can simply sign up for your FD account online at the comfort of your home. However, in the case of Senior Citizen Savings Scheme, you need to provide proper KYC documents and go through longer documentation process to open the account.
- Loans against deposit
In case you need emergency funds, you can avail a loan against your fixed deposit amount in almost no time. Such funds come with no end-use restriction. However, availing a loan against the Senior Citizen Savings Scheme is not such an easy process.
- Income tax benefits
When you invest in fixed deposit scheme for senior citizens, you receive a regular income which is chargeable; meaning you have to pay an income tax for the same. Therefore, it is important to know how the interest earned on fixed deposit is taxed. Senior citizens can avail exemptions up to Rs. 50,000 every year against interest income generated as per Section 80TTB.
On the contrary, you are eligible to claim tax exemptions up to Rs. 1.5 Lakh under Section 80C in case of investments in the SCSS.
With so many benefits on offer, a fixed deposit scheme outruns the SCSS due to its liquidity, attractive returns, and flexible tenor on offer. Choose the one that best suits your financial necessities post retirement and meet multifarious expenses with ease.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends.