Retirement Planning - Senior Citizen Schemes without Investment Risks
There are a few things to keep in mind when addressing requirements of senior citizens who cannot afford to take investment risks:
A-1. Ensure that retirement money is invested properly via high-yielding and safe vehicles.
B-2. Ensure that the regular lifestyle is not impacted due to the stoppage of salary on retirement.
C-3. Ensure that the tax liability is retained at a minimum assuming that there are no other liabilities like loan payments or big family functions.
To achieve (A1):
(a) There is no need to close the PPF A/C, and consider investing it elsewhere. After the completion of 15 years of term, one can extend the PPC A/C in blocks of 5 years; hence, attractive interest accrues on it, that too, totally tax-free. Any additional contributions stand eligible for 80(c) benefit. This serves C-3 also, pretty well.
(b) B-2/c, B-2/d will be able to absorb the PF/Gratuity/LIC Policy Receipts.
(c) Any surplus, can be deployed into very low-risk debt-based mutual funds (e.g., Birla Sunlife MIP Savings - 5) OR into long term bank fixed deposits (because we want to lock in the higher interest for as long a tenure as possible - note that we are in a declining interest rate regime). The low risk debt mutual funds provide instant liquidity, the bank fixed deposits have to be broken as and when a need arises - it should be kept in mind though.
(d) We need not plan for those Fixed Deposits that are likely to mature in 2012 now. Let at least 2011 December arrive.
To achieve (B-2):
(a) Pension from Central Government serves part of the purpose.
(b) LIC Pension Plan serves part of the purpose.
(c) An investment of Rs. 6 lakhs in Post Office Monthly Income Scheme (maximum limit, over a joint account) can be contemplated.
(d) Senior Citizen Savings Scheme for Rs. 15 lakh that is the maximum limit will generate 9% interest.
To achieve (C-3):
(a) Any surplus in the overall monthly cash inflow i.e., arrived at, in B-2, can be swept back as a fresh investment into the PPF Account.
(b) If you are opting for Senior Citizens Health Insurance, then yes you are right as it is a must have policy.
The above senior citizen schemes are without investment risks and can generate a very decent monthly cash inflow of approximately Rs. 30000 per month. According to me, this is the safest way to plan your retirement without any investment risks.