Ensure that you have a comfortable retirement by investing in a fixed deposit for senior citizens. Let us understand why the fixed deposit is an appealing investment option for senior citizens.
Investing for retirement requires you to set aside a major chunk of your savings to secure your financial future against inflation, and for healthcare. You can ensure a comfortable retirement by creating a well-planned diversified investment portfolio.
Investing in growth-oriented investment options like stocks and equities, help you grow your savings within a shorter period. However, due to changing economic conditions and market fluctuations, there may be a risk of losing your principal amount as well. When it comes to saving and investing for retirement purpose, bank FDs are considered to be one of the best instruments. The objective of investing for retirement is to earn maximum returns at minimum risk. Fixed deposit is one of the most preferred investment avenues, which can help you multiply your money over time.
Fixed deposit for senior citizen
A smart investment option that is not linked to the market, fixed deposit offers guaranteed returns on maturity. As a senior citizen investor, you can reap the benefit of higher interest rate, which can help you grow your retirement fund over time. Let us understand why bank FD is an appealing investment option for senior citizens.
Hassle-free investment avenue: One of the primary reasons for the popularity of FD among senior citizens is the simple process for investing money. Senior citizens do not want complicated transactions and frequent intervention in investment. Keeping these factors in mind, banks and financial institutions offer a simple, quick and hassle-free process of investing in fixed deposit for senior citizens.
Fixed and guaranteed returns
FD investment offers fixed and guaranteed returns. Unlike market-linked investment options, where the returns are unknown, you can be sure about the returns you will be earning on your fixed deposit investment.
Flexibility in interest pay out
Interest earned on fixed deposits is pre-determined. You can receive the interest earned on fixed deposit as per your choice. FDs offer you the flexibility to choose the interest pay out mode. The interest can be obtained on yearly, half-yearly, quarterly and monthly basis, or at the end of the fixed deposit term. You have an option to choose the payment frequency as per your financial needs. As a retired investor, you might not have a regular source of income. In such case, a fixed deposit for senior citizens can help you to earn regular income through suitable payment option.
Higher interest rates
The most significant benefit offered by banks to senior citizen investors is the interest rate advantage. Banks and financial institutions provide a higher rate of interest to senior citizen investors. Most of the banks in India offer a minimum of 0.25% to 0.5% higher interest rate than other investors.
Income tax benefit
The amount invested in a fixed deposit for senior citizens is eligible to receive tax deduction under Section 80C of the Income Tax, 1961. The banks deduct TDS (Tax Deducted at Source) on the interest income. Earlier, the TDS was deducted by banks and financial institutions if the interest income received from FD was more than Rs. 10,000 in a financial year. But with the recent changes in the Income Tax Act have made, it has further benefitted senior citizens. As per the revised tax law, senior citizens are not charged with TDS if the income earned from FD is less than or equal to Rs. 50,000 in a year. If such income exceeds Rs. 50,000 per year, then TDS is deducted at the rate of 10%. The TDS is charged at 20%, in case the investor has not provided PAN card details. This has made a fixed deposit a wise investment option for senior citizens.
Features of Senior Citizen FD Scheme
Fixed deposit for senior citizens can be opted only by senior citizens of the country. For investing in senior citizen FD scheme, the investor is required to submit their age proof. Following are some of the best features offered by a fixed deposit for senior citizen.
- The investor must be more than 60 years of age.
- Investors must submit the proof of age to invest in FD for senior citizens.
- Investors can choose the term of the deposit. Most banks and NBFCs offer FD term ranging between 7 days to 10 years.
- Banks offer a higher rate of interest to senior citizen investors as compared to other investors. Most of the banks generally offer 0.25% to 0.50% higher interest rate as compared to the regular rate of interest offered on fixed deposits.
- Banks offer overdraft and loan facility on a fixed deposit for senior citizen.
- In case of premature withdrawals, senior citizen investors will attract penalties which are same as other regular fixed deposits.
Senior citizen FD interest rates offered by top banks
The top banks' senior citizen FD interest rates for 2019 are:
|Bank name||Less than 1 year||1 to 5 year||5 years or more|
|State Bank of India||6.25% to 6.9%||6.9% to 7.25%||7.25%|
|ICICI Bank||4.5% to 7%||7% to 7.5%||7%|
|Canara Bank||4.7% to 6.85%||6.5% to 7%||6.5%|
|HDFC Bank||4% to 6.75%||6.25% to 7%||6%|
|HDFC Bank||3.5% to 5.5%||5.5% to 6.5%||-|
The FD interest rates mentioned above can be revised as per the bank's discretion.
Eligibility for opening a fixed deposit for senior citizens
Following is the eligibility criteria to open a fixed deposit account for senior citizens.
- You need to be above 60 years of age.
- Some bank and financial institutions allow entry at the age of 55 years, in case the investor has opted for early retirement.
- NRI investors can open a fixed deposit for senior citizens through NRO and NRE accounts. One of the key benefits of investing in a fixed deposit is that you can estimate the exact returns that you are going to earn. When you know about the profits you are going to make, it can help you to correctly establish your retirement goals. With a safe investment option like a fixed deposit for senior citizens, you need not worry about your golden days and earning a regular income. Make a smart investment choice by investing in fixed deposit for senior citizens to multiply your savings and benefit from the security and stability of your investment.
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