It's never too early to plan for retirement: Know how
What's the story
Retirement marks a major shift, transitioning from regular paychecks to relying on multiple financial streams for stability.
In India, with its nascent social security framework, understanding and actively managing these sources is crucial for a comfortable retirement.
This article explores strategies to maximize your retirement income, empowering you to achieve financial independence and peace of mind in your golden years.
Tip 1
Understand your pension options
India's major retirement schemes are the National Pension System (NPS) and Employee Provident Fund (EPF).
At retirement, you can withdraw a lump sum from NPS but are required to use a minimum of 40% to buy an annuity.
EPF permits full withdrawal at 58. Being aware of these options helps in planning withdrawals strategically.
Tip 2
Invest in Senior Citizen Savings Scheme
The Senior Citizen Savings Scheme (SCSS) is a fantastic investment choice for retirees above 60 years of age.
Boasting a high-interest rate of approximately 7.4%, it guarantees a stable and periodic income with quarterly interest payments.
With a maximum investment cap of ₹15 lakhs and a duration of five years (extendable by three years), SCSS serves as a secure investment option for seniors looking for consistent returns.
Tip 3
Explore mutual funds with SWP
Systematic Withdrawal Plans (SWP) from mutual funds provide retirees with flexibility and the opportunity for growth in their investment portfolio.
By investing a lump sum amount in mutual funds, retirees can establish SWPs to withdraw fixed amounts monthly.
This helps in covering living expenses without depleting the principal amount rapidly.
Choosing funds wisely based on risk tolerance and market conditions is crucial.
Tip 4
Leverage reverse mortgage
A reverse mortgage provides senior citizens with the opportunity to earn income from their property without having to vacate it.
Financial institutions make regular payments to the homeowner, utilizing the property as collateral.
This allows individuals with substantial real estate but limited cash flow to secure additional income without giving up property ownership.