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Retirement Planning Schemes

If a retiree is a pensioner or has a regular and sufficient income from sources like business, rental income, interest income from fixed Deposits etc, he/she need not necessarily make a detailed Retirement planning.

For retirees who do not come under the above category, it is imperative to make a careful planning to retire on their own terms. Keeping inflation trend in mind, one has to save and invest in various avenues to build a reasonable corpus before retirement. Then the regular income from the retirement corpus will help to enjoy the retired life!

Mutual Funds:

Among other options to create a Retirement Fund, investing in Mutual Funds on long term basis can be considered as the most important option. At least from the middle age, one should start investing in Equity/Hybrid Mutual Funds through SIPs as well as lumpsum to create a sufficient corpus.

After retirement, Systematic Withdrawal (SWP) can be made from the Mutual Fund investments. If the growth rate of investment is 10-11% p.a., one can withdraw @ 7-8% so that the corpus can grow further in spite of periodical withdrawal.

Mutual Funds are very tax-efficient investments.

The other options to combine for retirement income are:

Bank Fixed Deposits: A reasonable exposure to Bank FDs is always advisable to generate regular income. It will be a good source to rely upon in the event of any medical emergency etc.

Stocks (shares): Investment in stocks of Bluechip companies over a long period of time will lead to wealth creation as in the case of Mutual Funds. However, this option requires some amt. of skill and regular study about the stock market and the individual companies.

Public Provident Fund (PPF): Regular investment in this Govt. scheme can accumulate to a sizeable corpus during the long tenure of 15 years of PPF a/c. Further renewals can be made in blocks of 5 years each and hence PPF contributions can be continued till retirement. The whole interest accumulated is tax-free. Periodic withdrawals from PPF a/c without any tax implication will be a good source of income after retirement.
Senior Citizen Savings Scheme (SCSS): This is a Govt. Scheme where each senior citizen is eligible to invest upto Rs. 30 lakh for an initial period of 5 years. After 5 years the investment can be renewed for every 3 years. Interest is taxable.
RBI Floating Rate Savings Bonds 2020 (Taxable): These Bonds are issued with a tenure of 7 years. The interest rate will be reset twice every year on half-yearly basis. There is no maximum limit to investing in these Govt. bonds.
Real Estate: If any property held by the retiree doesn’t generate satisfactory income, the property can be sold and converted into a financial asset to generate regular and sufficient income.
Gold: The stock of surplus gold in the from of ornaments or otherwise can be converted into a financial asset to generate regular income to the senior citizens.
Sovereign Gold Bonds maturing at the time of retirement can also be a source of corpus to generate income.
We, as investment consultants, help retirees to allocate funds to different types of financial products to be  financially independent. We also help them to reduce tax outgo.

For more information, feel free to contact us.

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