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Four avenues to ensure a steady income in retirement years
Consider investing in these four avenues to ensure a steady income in retirement years.
Manage your cash flow in sunset years

When you retire, there is every chance that you will have retirement savings that get credited to your account. The amount is usually a sizeable one, and you may be tempted to splurge, but at the same time, you understand the need for careful investing to safeguard your sunset years. Here are a few tips on where to invest for creating a regular income stream during this period.

SENIOR CITIZEN SAVING SCHEME
It is a post office scheme under which quarterly payments are made at an interest rate of 9.20% per annum. The maturity period is five years which can be extended by three years and it allows you to invest a maximum of Rs 15 lakh. People who are 60 years or above are eligible to open this account. You can also avail tax benefit of up to Rs. 1 lakh under Section 80C, but the interest income is taxable.

ANNUITIES
You can buy annuities from life insurance companies who offer annual returns of about 6-7%. Choose the type of annuity that suits your needs as annuity is payable for 5, 10, 15, 20 years or for life, among others. Annuities from life insurers are taxable in your hands.

MONTHLY INCOME PLANS
These plans invest around 80% in debt and 20% in equities. These plans are ideal for those who want to invest largely in debt instruments but also wish to invest a small portion in equities. An MIP offers you monthly income, but if the markets fall you may stand a chance of losing the dividend payment. In the last five years, the top funds have offered returns of around 10-14% to investors. The taxation laws are the same as debt mutual fund. A shortterm capital gain will be taxed as per your tax slab, while long-term capital gain is taxed at 20% (with indexation) or 10% (without indexation), whichever is lower.

POST OFFICE MONTHLY SCHEME
This scheme allows you to invest any amount between Rs 1,500 and Rs 4.5 lakh per year in case of individuals and Rs 9 lakh per year in case of a joint account. It offers a return of 8.40% per annum, which is payable monthly and has a maturity period of five years.

 

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