Senior citizens can bank on these six schemes for steady and secure monthly income

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Past their working age, almost all senior citizens are critically dependent on savings instruments for regular cash flow for meeting their monthly expenditure. They are always in search of some sort of safe and secure instruments that would give them steady income. Unfortunately, declining interest rates of guaranteed savings instruments have driven down their income from these avenues. A few guaranteed monthly income options are still available in the market such as Post Office Monthly Income Schemes (MIS), Fixed Deposit monthly payout, Senior Citizen Savings Scheme.

These instruments help a senior citizen to have a simple income portfolio that is safe, tax efficient and easy to manage.

Money9 gives you a list of some of these useful instruments:

Senior Citizen Savings Scheme

Senior Citizen Savings Scheme (SCSS) is an exclusive scheme designed for senior citizens only. Only individuals of 60 years and above can invest in it. This scheme still offers 7.4% yearly interest, compounded quarterly.

Interest income is paid once every three months. SCSS is offered both by banks and post offices throughout the country. While the maturity tenure of the scheme is five years, it can be extended by another three years. Individuals can make a minimum investment of Rs 1,000 to a maximum of Rs 15 lakh.

PM Vaya Vandana Yojana

PMVVY not only offers senior citizens a stable income, but also gives them social security. Individuals can also opt for this scheme by paying a lump sum amount ranging from Rs 1.5 lakh to a maximum of Rs 15 lakh. The Rs 15 lakh amount is for one individual. If a couple is applying, the maximum amount can be Rs 15 lakh X 2 = Rs 30 lakh.

The person will get monthly pension immediately depending upon the tenure and the amount of the investment. Currently, this scheme also offers 7.4% interest per annum same as SCSS. Along with maturity benefits, PMVVY also offers pension payment and death benefits to the investors or the survivors.

Post office MIS

Post Office MIS or monthly income scheme is one of the most secure investment avenues and fit for senior citizens as this is a government-guaranteed scheme.

Post Office MIS can be opened either by an individual or by two-three people jointly with an equal share of investment and comes with tenure of five years.

Investors holding a single account can make investments up to Rs 4.5 lakh, whereas with a joint account the investment amount can go up to Rs 9 lakh. Post Office MIS currently offers an interest rate of 6.6% and a 5% terminal bonus.

RBI floating rate bonds

Any senior citizen can invest up to Rs 15 lakh or more in RBI floating rate bonds. It has a lock-in of minimum six years for citizens above 60 years of age.

However, above 70 years of age lock in period is 5 years and above 80 years of age lock in period is 4 years. Interest rates are currently 7.15% per year and paid half yearly.

Fixed deposit monthly payout

Fixed deposit monthly income schemes offer regular monthly fixed income to senior citizens. Depending on the bank, the duration of the FD goes up to 10 years.

Additionally, if the tenure is five years or more an FD of a senior citizens fetches additional interest rate up to 30 basis points. Besides, one can get a monthly payout along with the final payment at the maturity.

Long-term government bonds

Long-term government bonds are another safe option to earn regular income. But the maturity period is considerably long, i.e. 15 years and more. That is not always suitable for a senior citizen. Government bonds generally offer 8% and more return and is paid twice a year.

So, one can combine them with other investments to earn income throughout the year. Also, on maturity, the person gets back the entire principal. Another benefit of a long-term government bond is that they are traded in the secondary market and hence, one can sell them off as and when he/she wishes.