Retirement is a period that everyone wants to live feeling relaxed. This period should be planned properly especially in terms of money. How to know the best money management ideas for Retirement is a big concern for people nearing retirement. There is no perfect time to start saving in the name of retirement but it should be as early as possible to decrease the burden of the amount of savings over the years. One may determine the total amount to be used up in his/her retirement period and then start planning for it accordingly.
There are a lot of assets suitable for this particular period. Some of them are :
1.Senior Citizen Savings Scheme
Many people overlook this option but it is actually a very interesting way to invest. SCSS is a government initiative to give income quarterly to people who have either crossed the 60 age mark or have taken voluntary retirement at 55. Currently at 7.4% interest rate (paid quarterly), it comes with a 5 year period which can be extended to another 3 years on maturity.
2. Government Bonds | Quasi Bonds
Investing in government backed bonds like RBI bonds, Quasi Bonds like REC, IRFC, PFC, etc. are some great instruments available for any conservative investor (those who do not want to lose their capital at any cost, low risk takers), not just to people nearing retirement. The gross interest rate (before taxes) on the same are currently around 6-7% (approx.). This is mostly suitable for people in 30% or above tax brackets while there is one more way to avail the same is investing through Bonds of ETFs which consists of government backed companies and sovereign bonds only. This is suitable for people in any tax bracket.
3. National Pension Scheme
This is one of the easiest ways to create annuity for people near retirement. Adding money in NPS offers the choice to further diversify investments in Equity, Government or Corporate Debt. An interesting taxation aspect about NPS is that it allows for an additional tax benefit to invest another Rs50,000 on top of your existing 80C limit of Rs1,50,000. It becomes even more beneficial for central government employees.
4. Public & Employee Provident Fund
PPF is one of the most preferred options of many people nearing retirement as it comes with guaranteed returns backed up by the government. However one can also consider EPF which allows for a higher rate of Interest 8.55% Vs 7.1% of PPF. One totally amazing feature of EPF is that the employer also makes an equal monthly contribution as the employee doubling the capital invested for the individual. Although there are now limits on how much contribution you can do in EPF which needs to be taken into account.
These were the investment avenues for retirees which can be used as one of the best money management ideas for Retirement. However this will suit only a very conservative investor. One should also diversify into indices, REITS, InvITs and other marginally aggressive assets like rental properties to create unrelated alternative sources of income for life.
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