Retirement Planning: In today’s times, proper retirement planning has become extremely important. This is because expenses don’t end after retirement; in fact, they often increase. Therefore, retirement preparation shouldn’t be limited to simply saving money, but should be such that a fixed income is received every month even after retirement. Today, we are telling you about one such secure retirement plan.
You can start retirement planning by setting aside a small amount from your salary every month. First, this amount will have to be invested in an RD, or Recurring Deposit. In an RD, you deposit a fixed amount every month, similar to an SIP. This is a completely secure investment option with guaranteed returns. You can choose an RD from any bank according to your convenience.
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Interest Rates on RDs in Banks
Bank and interest rates change from time to time, but currently, the interest offered on RDs in some major banks is as follows:
State Bank of India offers interest rates of up to 6 to 7 percent.
In ICICI Bank, this rate is between 4.75 and 7.20 percent.
HDFC Bank offers interest rates of 7 to 7.25 percent.
Kotak Mahindra Bank can give returns of up to 6 to 7.40 percent.
Axis Bank offers interest rates of 5.75 to 7.20 percent on RDs.
This information is based on data from BankBazaar.
Increase Investments if Retirement is Near
If you have less time left until retirement, increasing the monthly investment amount can be a wise step. This can help create a good fund in a shorter time. Now, let’s understand this entire strategy through an example.
Understand the Entire Plan with Calculations
Let’s say a person started preparing for retirement at the age of 30 and wants to retire at the age of 50. That means he has a total of 20 years for investment. This plan utilizes three safe investment options: first, a Recurring Deposit (RD), then a Fixed Deposit (FD), and finally, the Post Office Monthly Income Scheme (MIS).
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How the investment will be made
For example, let’s say an individual invests ₹5000 every month in an RD, assuming an average return of 6 percent.
In the first 10 years, the RD matures to approximately ₹8,23,494.
In the next 10 years, a similar amount will be accumulated through the RD.
The amount received from the first 10 years of the RD is invested in an FD for the next 10 years, earning approximately 6.95 percent interest.
This FD generates an amount of approximately ₹16,12,383.
Thus, over a period of 20 years, the total fund amounts to approximately ₹32,59,371.
Monthly income from Post Office MIS
For monthly income after retirement, you can invest a portion of this fund in the Post Office Monthly Income Scheme. If you invest ₹15 lakh in this scheme, you will receive a fixed income of approximately ₹9250 every month. The remaining amount can be kept safely in an FD.
Key features of this plan
The biggest advantage of this retirement plan is that it includes safe investment options like RD, FD, and Post Office MIS, which offer guaranteed returns. This protects your investment from market fluctuations and ensures a regular income even after retirement.