7 Ways to Get Monthly Income after You Turn 60
What would you do when you turn 60 and they declare you officially as a senior citizen? Of course, your first concern will be your financial security. This is crucial because when you retire you are cut of from regular sources of income. Therefore, it is important you have a plan to survive the winter of your life in peace and happiness
To tide over the loss of income you need to substantiate it with other sources of income. The government offers many options for us to invest and get regular monthly incomes. Many of us are still unaware of these products:
Senior Citizen Saving Scheme: This is a saving scheme started by the government of India designed specifically for senior citizens. The age limit is 60 years and 55 years for those who have retired by other methods. It gives a 9% interest rate per annum computed quarterly. The maturity period is 5 years and can be extended by 3 years. The interest is fully taxable but there is no tax deduction at the source.
Reverse Mortgage: This is a relatively new option announced in 2007 specifically targeted for senior citizens to receive a regular amount of income. Reverse mortgage works by pledging your house with the bank. The bank pays you a fixed amount of money for the house. Once you have moved out or in case of death, the bank gives an option to your heirs to close the loan. If not, the bank can sell the house and recover their loan amount and interest there of. The rest is given to your heirs.
Only people who have reached 60 years can opt for this option. If the co-applicant is your wife, she must be of 58 years. This age bars makes this specifically suited for senior citizens. The payment is credited to your account monthly or quarterly or in one go. Reverse mortgages are not taxed as it is considered as a loan and not as income.
Some of the banks that provide Reverse Mortgage in India now are State Bank of India, Central Bank of India, Union Bank of India, Bank of Baroda, LlC Housing Finance, Punjab National Bank, Canara Bank etc. Reverse mortgage is not popular at the moment because people are yet to take note of it. Till now only 7000 reverse-mortgages have been sold.
Immediate Annuity: Opting for an immediate annuity is another option when we are retired. It is a fixed income generating scheme, in which we pay a lump sum as single premium with the insurance agent and then receive a steady flow of income periodically. The payment amount and the annuity depend on your age and the product you choose.
You will receive annuity or the income from the next year of paying premium and it will be paid to you as long as you are alive. The annuity received increases with every year. There is an option for annuity to extend till the death of the spouse as well. Immediate Annuities are a good monthly income plan after retirement because it is secure and definite.
Nonetheless, in life long annuity plans sometimes the principal is not recovered because of immediate death of the individual. It is advisable to go for fixed tenure plans if you want to recover your principal. A popular annuity plan is LIC’s Jeevan Akshay.
Senior Citizen Fixed Deposits: The most common and convenient method a senior citizen can receive a monthly income is by investing in senior citizen fixed deposits. At present, banks provide interest rate up to 9%. They can invest also in corporate fixed deposits, but they are riskier than bank deposits. Banks also provide monthly income plans. These are tax free at source. But, the interests are taxed.
Post Office Monthly Income Scheme: The Indian Post office department provides some secured investment plans which provide a monthly income for those investing in it. The rate of interest is 8.2% with a maturity period of 5 years. However, there is a ceiling on investment of Rs. 4.5 lakhs for an individual. Jointly an amount of Rs. 9 lakhs can be invested. Though, the tax is not deducted at the source, the returns are taxed.
Mutual Funds: Just like post offices, mutual funds also provide monthly income schemes to individuals. Senior citizens can also invest in these funds to get a monthly payment. However, these funds carry with it an element of risk because these are invested in equity markets. Therefore, you must be extra cautious when you invest in these funds.
Triple A Rated Bonds: Would your retired life be peaceful if you stay awake all night thinking about a risky investment? Definitely, it would be an awful way to spend your post retirement life. At that age what you need is a steady flow of income that is very low on risk. Triple A rated bonds are a good choice. Triple A is a rating given by the government, which means that the bond is highly secure and safe. The returns are pretty good with corporate AAA bonds fetching about 9.70%. Having an assured and pre determined income enables you to plan ahead for future expenses.
Getting old is not such a bad thing. After a life’s hard work you really need some time to rest and be at peace with yourself. Only at old age could you actually get the time and opportunity to find that inner peace and happiness. This happiness lies in the fact how you prepare yourself before you grow old. The most important thing that we must consider is the options that can bring monthly income so that all of our expenses are easily met.