Planning retirement requires preparation of a financial portfolio to fund your lifestyle, healthcare needs, and legacy planning in case you have any. Post-retirement, the wealth generation shifts to one of income generation as well as protection of capital. Here are five best investment plans after retirement in India for securing your post-retirement life. For professional advice on retirement portfolio creation, you can seek the help of an investment advisor in Chennai, which specialises in retirement and investment planning.
1. Systematic Withdrawal Plan (SWP) In Mutual Funds
A Systematic Withdrawal Plan (SWP) in mutual funds is an excellent option for retirees looking to receive a regular income. With an SWP, you can withdraw a fixed amount periodically, which allows you to manage cash flow. SWPs are a tax-efficient way to generate income, as only the gains portion of each withdrawal is taxable. This can result in significant tax savings compared to traditional fixed-income options.
Advantages of SWP in Mutual Funds:
- Flexibility to choose the withdrawal amount and frequency (monthly, quarterly, etc.)
- Offers capital appreciation along with regular income
- Tax efficiency as only capital gains are taxed, not the entire withdrawal amount
Taking the advice of an investment advisor will allow you to choose the best mutual fund schemes that will suit your risk tolerance and income needs so that this corpus is strictly in addition to your retirement income.
2. Senior Citizens’ Saving Scheme
This is a government-sponsored scheme specifically for senior citizens, so there is high security attached to it. Senior Citizens’ Saving Scheme offers an attractive interest rate that can be allowed to open at post offices or any bank mentioned by the government. The scheme’s tenure is five years, extendible up to three years more. It pays interest quarterly, thus providing a steady source of income for most retirees.
Benefits of Senior Citizens’ Saving Scheme:
- Government-backed, ensuring high safety of capital
- Quarterly interest payments offer regular income
- Tax deductions up to ₹1.5 lakh under Section 80C (though the interest earned is taxable)
Senior Citizens’ Saving Scheme is suitable for conservative investors who prioritize capital protection. However, it’s advisable to balance SCSS with other higher-return options like SWP in mutual funds for a diversified portfolio.
3. Bonds And Debentures
Another alternative for retirees, if they are willing to accept a stable income and low-to-moderate levels of risk exposure, would be bonds and debentures. Bonds provide investors with an interest income stream, and this type comes in various flavours, so to speak, in the form of government bond, corporate bond, and tax-free bond, for example, depending on the retiree’s comfort level regarding risk exposure. Some bonds, such as tax-free bonds, also offer tax benefits in addition to the interest income received, which should be of great interest to high-income earners in retirement.
Key Features of Bonds and Debentures:
- Low-risk and predictable returns, especially in government or AAA-rated corporate bonds
- Can provide monthly, quarterly, or annual interest payments
- Tax-free bonds can offer tax savings on interest income
An investment advisor can help you navigate through the different types of bonds and create a portfolio that balances risk and income, tailored to your retirement needs.
4. Balanced Hybrid Mutual Funds
Balanced hybrid mutual funds invest in both equity and debt, providing a blend of growth and stability. These funds are suitable for retirees who are comfortable with some market exposure but prefer a balanced approach to minimise risk. The equity portion in hybrid funds allows for growth, while the debt portion adds stability.
Key Benefits:
- The equity component helps in capital appreciation.
- Debt investments reduce the portfolio’s volatility, making it safer for retirees.
- Long-term capital gains on equity-oriented hybrid funds can be more tax-efficient than fixed-income instruments.
Balanced hybrid mutual funds are ideal for retirees with a moderate risk tolerance who want both income and growth. An investment advisor can help select funds with a proven track record and align them with your retirement goals.
5. National Pension System (NPS)
The NPS is another amazing retirement scheme that provides partial withdrawal on maturity with the option of an annuity. It is mainly designed for working professionals, but NPS can also be a good retirement option for people under 60 years. Thus, via the investment that the retiree makes in NPS, he or she is able to gain a consistent income while availing of tax benefits. The schemes for NPS are managed by professional fund managers, who maintain a balanced growth approach along with stability.
NPS Benefits:
- Tax-saving benefits under Section 80CCD(1) and Section 80CCD(1B)
- Flexible annuity plans upon retirement
- Market-linked returns through equity and debt exposure
NPS withdrawals and annuity plans offer tax-efficient options for retirees. Consulting with an investment advisor can help tailor the NPS allocation to align with your income requirements and tax preferences.
Choosing The Right Retirement Investment Mix
Selecting the best investment options depends on your individual financial goals, risk tolerance, and liquidity needs. Here’s a summary of how different plans can serve retirees:
- For income security: SCSS and bank FDs provide predictable returns and are ideal for conservative investors.
- For regular income with growth potential: SWP in mutual funds offers a balanced approach to earn regular income with some capital appreciation.
- For tax-saving benefits: NPS and tax-free bonds offer tax advantages, helping to preserve retirement income.
- For low-risk, stable returns: Government bonds and high-rated corporate bonds provide steady income with low risk.
Retirement planning requires careful consideration of both current income needs and long-term capital preservation. Consulting with experienced financial advisors can make a significant difference in designing a well-diversified and tax-efficient retirement portfolio.
At Intelli360, our team of professional Financial advisors specializes in retirement planning. We offer personalized guidance on the best retirement investment options, including SWP in mutual funds, bonds, SCSS, and more, tailored to your financial goals. Take control of your retirement and secure a comfortable future by consulting with us today.