With interest rates falling, it is not a complete nightmare either to build a reliable revenue stream to perceive you across retirement life. If you figured that it was daunting to get to a nice pension corpus by the time you hit the age of 60, the current rate cut scenario can be a bad weather for you. Considering that many of us no more enjoy an inflation-indexed pension from our workplace, whether in the government or in the private sector, it is completely up to us to allocate our retirement income and the capital we have generated in our earning lifetime constructively enough just to stay aware of our post-retirement household income. Here are few factors to take into consideration if you are retired and are in the process of choosing investment vehicles for your regular financial needs.
- Stick to them and resist the urge to go for 'high-return' options where you have no idea where your return comes from, even though safe choices such as bank deposits or post office schemes.
- A thumb rule for senior citizens is to always consider the safest investment vehicle first and avoid a high-risk debt investment. Even though they appear to be staid and uninspired, stick with investments you appreciate.
- In today's generation most of the investors fall into the trap of assuming that it must be fantastic if an investment vehicle is pitched by their financiers, advisors, consultants or fund managers.
- Understand the necessity to outpace inflation throughout your retirement period, in addition to the need to ensure the stability of your capital. The interest income you receive from your fixed deposit may seem more than ample today to meet your financial needs. Hence, it can be beneficial if you go for regulated market vehicles such as mutual funds or else annuities in order to receive inflation-beating yields.
- Pay close consideration to the funds' or investments' liquidity and also give attention to the post-tax returns while selecting your options.
Considering the above discussed, which can be the perfect investment options to receive acceptable post-tax return:
Senior Citizens Savings Scheme (SCSS) of the post office currently offers you an interest rate of 7.4 percent per annum and comes with a lock-in period of 5 years. Considering its sovereign guarantee that renders it completely secure, today's SCSS return is much better than one-to-five-year fixed bank deposits, offering between 6%. And even you can also consider short-duration debt funds for your initial financial requirements. Rather than going for the dividend alternative in such funds, it can be much more effective to use a systematic withdrawal plan to satisfy the remaining income needs after taking into consideration the SCSS income.