Retirement Investment: After retirement, the biggest question facing senior investors is where to invest so that their money is safe and they also get better returns. In this situation, the Senior Citizens Savings Scheme (SCSS) and Senior Citizen Fixed Deposit (FD) are two popular options. SCSS, a government scheme designed for people over 60 years of age, offers 8.2% annual interest and allows investments up to ₹30 lakh.
On the other hand, Senior Citizen FDs have a flexible investment tenure, and the interest rate varies depending on the bank, ranging from 6.6% to 8%. SCSS is government-guaranteed, while FDs offer insurance up to ₹5 lakh under the DICGC. Interest on both is taxable, but SCSS also offers a tax exemption under Section 80C.
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Where to invest after retirement?
After retirement, when there is no source of regular income, most senior citizens are confused about where to invest their money that provide security and good returns. In this situation, two schemes are considered the most reliable—the Senior Citizens Savings Scheme (SCSS) and the Senior Citizens Fixed Deposit (FD). Both schemes are safe, but their nature and benefits differ.
What is the Senior Citizens Savings Scheme (SCSS)?
This is a government scheme specifically launched for citizens over 60 years of age. The SCSS has a five-year tenure, which can be extended for three more years. It currently offers an annual interest rate of 8.2%, which is higher than most bank FD rates. The maximum investment limit is Rs. 30 lakh, and interest is credited to the account every three months. Since this scheme is guaranteed by the Central Government, it is considered a very safe investment option.
Tax Benefits in SCSS
Investing in the Senior Citizens Savings Scheme offers a tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. However, interest is taxable, meaning interest earned will be added to your taxable income.
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Senior Citizen FD Options
Bank fixed deposits are a flexible investment option for senior citizens. Their tenure can range from a few months to 10 years. Many banks offer higher interest rates to senior citizens than to regular customers. For example, Federal Bank offers 7.20% interest on 999-day FDs, while HDFC, ICICI, and Kotak Mahindra Bank offer rates around 7.10%. State Bank of India (SBI) offers 6.95% interest on 2–3-year FDs, while small finance banks offer up to 8%.
What’s the difference between the two?
Both investment options are safe, but SCSS is government-guaranteed, while FDs offer insurance up to Rs 5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC). SCSS is slightly better in terms of security. Interest on both is taxable, but SCSS offers tax exemption under Section 80C, while FDs only offer this exemption on five-year tax-saving FDs.