Plan your retirement in advance

The best perk of retirement is financial independence. For this very reason, retir-ement planning is an integral part of financial planning. The retirement planning may appear to be simple, but choosing the best product for your needs is not just crucial but also an involved process.

Retirement planning includes the plans you make before your retirement as well as the ones you make post-retirement to ensure a smooth ride. Here, we discuss five investment products, which you can choose post retirement.

Senior Citizen Saving Scheme, as the name suggests, is tailor made for all senior citizens above 60 years of age. Those who have retired on superannuation or VRS can also join this after 55 years of age. It offers annual returns of 9.3 per cent on deposits and comes with a maturity period of five years. For those seeking to operate a joint account, this scheme allows an individual to operate more than one account in individual capacity or jointly with your spouse. The maximum amount of investment under the scheme is capped at Rs 15 lakh.

This scheme offers tax deduction under Section 80C, but the interest earned is taxable if it is more than Rs 10,000 per annum. Premature closure is allowed for investments in this scheme after one year on the deduction of an amount equal to 1.5 per cent of the deposit and after two years at one per cent of the deposit.

Pension plans offered by various insurance companies are investment plans that generate a regular income flow for you when you are retired. If you are joining a pension plan post-retirement, you can invest a lump sum amount as a single premium. If joining before retirement, premiums can be paid annually, quarterly or monthly over a period of time.

In return, the plan offers a regular income on retirement or after a certain point of time depending on the plan you have taken. Annuity pension plans, for example, pay annuity amount for a certain number of years while life annuity plans pay pension throughout your life.

You can use this income to meet your monthly household needs. Pension plans must be chosen carefully after evaluating your pension requirement.

Opting for a liquid fund is one of the best investment decisions that you can make. Liquid funds are safe and as the name suggests, comes with high liquidity, making it ideal for post retirement investment.

Since liquid funds do not have a lock-in period and comes with a maturity period of up to 91 days, the money can be easily withdrawn if needed for any financial emergency like house renovation, child’s marriage or any other.

Fixed deposits have been one of the most preferred investment vehicles in India since decades. Fixed deposits of varying tenures can be ideally chosen for post-retirement investments, as they offer safe investment without the risk of losing the principal amount. The interest rates of FDs may not be as lucrative as SCSS or liquid funds, but the popularity and reliability of the scheme matter more. The easy availability of loans over the deposits and absence of extra charges for liquidation make fixed deposits a preferred investment choice for seniors who have a low risk appetite. However, TDS is applicable on the interest earned from an FD.

A reverse mortgage loan is not an investment, but the key here is the income stream you may get from it. It is a tailor-made income generation scheme, offering senior citizens an option to receive a regular source of income in their sunset years. Under the reverse mortgage scheme, you can pledge your house with a bank and in return receive regular monthly income from the bank for a pre defined time period. You can choose this if you have no other options of regular income.

The funds you receive under this scheme are totally tax free. You can choose between a monthly, quarterly, annually or as a lump sum amount receivable to the tune of 85 per cent of the property price.