Retirement Investment Options

A lot of people plan, save and invest for a comfortable life after retirement. While some do succeed in living the life of their dreams post-retirement, some fall short due to faulty planning and unexpected developments in life. There is a lot of discussion on how to invest for retirement but very few provide good advice on the best investment plan for a retired person or reliable investment options after retirement.

Contrary to popular belief, you don’t have to stop investing after retirement because life doesn’t stand still post-retirement, it goes on. For many ‘young-at-heart’ senior citizens, life begins at 60, and with increasing life expectancy, their retirement kitty may not be enough to sustain them for another 25-30 years.

As per the SRS report issued by the Registrar General of India for 2013-17, the life expectancy for urban men is 71.20 years and urban women is 73.70 years[1]. Remember, that’s just an average – many among those reading this article may live beyond 85.

So, what do you do for a long and extended retirement life? You invest again because there are plenty of smart retirement investment options available today. If you have been looking for good investment options after retirement or best investment options for retirement, here are a few choices that beg your attention.

Best investment plans for a retired person

Financial planners recommend a balanced combination of fixed income assets as best investment options for retirement. If they are not financially skilled to create a balanced portfolio and optimize their investments, they can always take the help of a wealth manager.

  1. Tax-free bonds: Tax-saving bonds help you save taxes, are secured and provide liquidity as they are listed on the BSE and NSE. These bonds earn tax-free interests annually and can be stored physically or in a demat account. Tax-free bonds are one of the best investment options after retirementfor high net worth individuals. If you fall under the 30% tax bracket, this is an ideal safe haven and tax-saving tool for you.
  2. Senior Citizens’ Saving Scheme (SCSS): With fixed and lucrative returns of 8.6% per annum, SCSS is an ideal retirement investment option. This scheme is especially designed for senior citizens and anyone above the age of 60 years can buy this scheme from a bank or post office. SCSS has tenure of 5 years but can be extended for 3 years post the maturity of the scheme. Senior Citizens’ Saving Scheme allows a maximum investment of Rs. 15 lakh and is eligible for tax benefits under Section 80C. You can withdraw the money in case of emergencies as it allows premature withdrawals.
  3. Bank Fixed Deposits: Bank fixed deposits have always been popular with retired investors because they are eligible for higher returns. Currently, banks offer up to 7.25% for deposits ranging from 1-10 years but senior citizens can get up to 7.75% interests on FDs. If your concern is to save taxes, you can invest in a five-year, tax-saving fixed deposit.
  4. Debt mutual funds: While retirees can even invest in equity mutual funds, the current uncertainty in the equity market may intimidate them. However, they can still invest in debt mutual funds through the SIP route. You can hold a significant portion of your fund in a debt fund because it offers more liquidity and invites less tax rates than a bank fixed deposit.
  5. Non-convertible debentures (NCDs): NCDs are investment instruments issued by corporates for a specific tenure to raise funds. Since it is a fixed income instrument, it is an ideal investment option after retirement. NCDs are traded on stock exchanges and you can earn periodic interests – monthly, quarterly, annually or cumulative. On maturity, you receive the principal amount that you have invested. Non-convertible debentures are among the best investment options for retirement because the interest earned is higher than bank FDs and post office savings. Moreover, if you buy a listed NCD, you can easily sell in the secondary market before maturity. You can start investing, with as low as Rs. 10,000 in NCDs.

Also Read: Mutual Funds For Senior Citizens

Conclusion :

You should invest a portion of the returns from your EPF, PPF or pension/annuity plan for your post-retirement life. Don’t spend all the money you received on retirement just because you have an annuity plan that will pay you pension. Life is unpredictable and even more so where deadly pandemics and epidemics are gradually becoming the norm. After retirement a bulk of your expenses will be related to healthcare, medications and hospitalisation, so ensure that you have adequate health insurance or an emergency fund to take care of contingencies.

Angel One, one of the largest independent full-service retail broking houses in India, provides cutting-edge tools, research, technology and investment expertise to help you invest in the right place post retirement. You can invest in market-linked or fixed-income instruments according to your financial goal, investment horizon and risk appetite. Choose from corporate bonds, tax-saving bonds, government of India savings bonds,  NCDs, sovereign gold bonds and 54EC bonds.