senior citizens pension tips: Rs 69,150 monthly income with govt guarantee: How senior citizens can invest to build their own pension

Getting a government pension, which is a safe and guaranteed regular income, after retirement has always been a dream for many people. While everyone cannot be eligible to get a government pension, you can generate a good amount as government-backed regular income during your retirement years by investing in certain schemes.

The scope for higher regular income has increased substantially after the Budget 2023 proposal to enhance the investment limit for Senior Citizens‘ Saving Scheme (SCSS) from Rs 15 lakh to Rs 30 lakh and for Post Office Monthly Income Scheme (MIS) from Rs 4.5 to Rs 9 lakh. In combination with other government schemes, these can help you to generate a regular monthly income of Rs 69,150. Let us understand how you can optimise your regular income through these schemes.

When you invest only in fixed rate avenues: Conservative investors who prefer certainty in their regular income can go for options that offer a fixed return for the entire duration of the investment. For instance, the interest rates of SCSS and MIS may change every quarter. However, once you invest at a particular rate, your returns are locked in at that rate and so remain fixed for the entire investment tenure of 5 years.

However, the enhanced limit of SCSS and MIS will be effective only in the next financial year, which starts on April 1, 2023. So, you may opt to invest a maximum amount of Rs 15 lakh in SCSS and Rs 4.5 lakh in MIS now and then top it up with similar amounts in the next financial year, beginning April 1, 2023.

Do remember that SCSS offers only quarterly payments. So if you invest Rs 15 lakh, you will get a quarterly income of Rs 30,000, which is equivalent to a monthly income of Rs 10,000.

Besides these, you can opt for the Pradhan Mantri Vaya Vandana Yojana (PMVVY), which has been specifically made for senior citizens. You can invest up to Rs 15 lakh and get a return of 7.4% when you go for the monthly mode of interest payment. However, this scheme in its current form is open for investment only until March 31, 2023. The government may or may not relaunch the scheme after that. So, you can invest before this date to lock in this return for at least 10 years.

How senior citizens can maximise their fixed regular income (Rs 54 lakh corpus)

When you include floating rate option: If you want a secure regular income with good returns and are comfortable with some degree of fluctuation, then you may go for RBI Floating Rate Savings Bond. This offers an inflation-beating return which is linked to the interest rate of the National Savings Certificate, and offers a premium of 0.35% above the rate offered by NSC. Among the small savings schemes, NSC is known to offer an attractive interest rate, which is linked to the government bond’s yield.

RBI’s floating rate bonds have no upper limit for investment. So if you want government-guaranteed, inflation-linked return as a part of the portfolio, you can invest a good part of your retirement corpus here. Currently, this bond offers a return of 7.35%, which is quite attractive. If you invest Rs 54 lakh in this bond, you can get a semi-annual income of Rs 1.98 lakh, which is equivalent to a monthly income of Rs 33,075.

Creating regular income for senior citizens with RBI floating rate bond (Rs 1.08 crore corpus)

You can double your income if you invest with your spouse: Most schemes giving higher interest rates are for senior citizens. So, if your spouse is also a senior citizen, you can invest with them and follow the same process as shown above. This will double your monthly income from Rs 34,575 to Rs 69,150 when you go with only fixed income options and a retirement corpus of Rs 1.08 crore. However, if you have a bigger corpus of up to Rs 2.16 crore, you double this monthly income from Rs 67,650 to Rs 1,35,300.

However, if your spouse is yet to become a senior citizen, then you have the option to invest all alone — as shown above — or get your spouse to invest in non-senior citizen-specific schemes like Post Office MIS and RBI Floating Rate Bond till they become a senior citizen.

Must retain a good part in liquid investment: As most government-backed investment options come with a long lock-in period, you should not forget to keep a good amount of corpus in liquid form to deal with emergencies and other life contingencies. You can keep your liquid funds in savings bank accounts, fixed deposits or debt mutual funds.