Retirement Options

A long drawn retirement planning is effective only when you have taken the right options.By investing in various instruments for 25-30 years, a great corpus is generated which was your desired goal.But if it is not yielding the desired income then your 30 years hard work goes for a toss.You struggle for meeting your living expenses post retirement.I have met so many  retirees whose hard earned money is invested in wrong instruments like ULIPs and 99% times the money depreciates loosing even the capital invested.

Thus its very important that once retired, you should do a thorough research if possible, or take help of a Certified Financial Planner.There are various options available to a retired individual and a mix of these options will make sure that he gets the needed income.Here we look at some of the options:

1.Senior Citizen’s Saving Scheme: 

Investment scheme launched by Govt.of India pays  9% p.a Interest on a quarterly basis.A maximum of Rs.15 lakh can be invested for  a term of five years.Once five years completed the scheme can be extended for three more years.Any retiring employees of age 55 and above can invest in the scheme.The major attraction in the scheme is risk free investment with high rate of interest.

This is a  monthly income scheme offered by Postal Office.The scheme gives 8% p.a.interest which is payable monthly.A max of 4 lakh in a single account and Rs.9 lakh in joint account can be invested.A minor can also open this account provided he/she has completed 10 years of age.This scheme also, due to its risk free nature, has been one of the prime investment avenue not only for retirees but also for young individuals.

3.Immediate Annuity: 

Not many insurance companies offer this product.As the name implies,the annuity starts form next month or a year later after purchase.The rate of annuity varies and is declared by the company. Currently it is hovering around 5-7%. At present only LIC is offering immediate annuity to investors.

4.Monthly Income Plans:

OR MIPs ,are schemes by Mutual Funds with an option of monthly income in the form of dividends.They are primarily Debt schemes with 0-25% exposure to equities.The dividend is not assured and depends on the performance of the scheme.Barring two three good schemes,most  have skipped dividends during bad market conditions.Thus,make it an option once you have exhausted other avenues.

5.Reverse Mortgage:

In a Reverse Mortgage Scheme,an individual mortage his property in which he/she is residing to a financial institution>The institution in returns pays a monthly installment/lumpsum in form of  a loan.The tenure is generally for 15-20 years.Once the loan matures, either the mortgager releases the property by paying the outstanding loan or the institution sells the property to recover the loan amount and pays the balance to the mortagager.The concept is newly launched in India but  will get importance as its being regarded as a very effective tool for someone who don’t have dependents to take care and more companies apart from NHB, Dewan Housing and Central Bank will foray into this product line.

Thus there are various options available to retirees and going forward we can see more product line.But Care has to be taken of choosing the right options which fits to your requirement basket.