SCSS Calculator: How Senior Citizens Can Get Annual Income of Rs 2.4 Lakh For 5 years?

Senior Citizens Savings Schemes (SCSS) is a government-backed program purely for senior citizens who want to generate fixed income during their golden years. Anyone over the age of 60 can open an account at any post office or bank by depositing a minimum of INR 1,000 and a maximum of INR 30 lakh.

The account has a 5-year maturity period, making it eligible for the tax benefits provided by section 80C of the Income Tax Act of 1961. Senior citizens can receive a generous 8.2% annual return on their SCSS contributions, payable on a quarterly basis. Let's learn from our industry experts how older individuals can earn Rs 2.4 lakh in yearly income over the course of five years.

Shruti Jain, Chief Strategy Officer at Arihant Capital

The Senior Citizens Savings Scheme (SCSS) is a government-supported savings program for Indian senior citizens (aged 60) that offers safe and regular income to its investors. It is best suited for retired investors looking for a low-risk investment option with the added benefit of tax saving under IT section 80C.

By investing Rs 30 lacs in the SCSS, the investor can earn Rs 2.4 lacs annual income. The interest on this deposit is paid quarterly. This single deposit scheme operates on the simple interest income generation principle. So, if you invest Rs 30 lakhs, you can earn Rs 61,500 per quarter at an annual interest rate of 8.2%.

Until the last financial year, the maximum investment limit was only Rs 15 lacs. However, the maximum deposit for SCSS was increased to Rs 30 lakh from Rs 15 lakh in the Budget 2023-24 by Finance Minister Nirmala Sitharaman.

Furthermore, following the initial five-year period, the account holder can extend the scheme for three years, guaranteeing a consistent and dependable monthly income stream.

Amar Ranu, Head - Investment Products and Insights, Anand Rathi Shares and Stock Brokers

Senior Citizen Saving Scheme or SCSS is a government-backed scheme for senior citizens for a tenure of 5 years, extendable by another 3 years at the rate applicable at that point of time. The maximum investment allowed is Rs. 30 lakhs and the current interest rate is 8.2%. One can also claim a deduction from income under Sec 80 C of IT Act for a maximum amount of Rs. 1.5 lakhs by investing in SCSS.

Here, the investors can opt for a quarterly payout which is fixed on first day of Apr, Jul, Oct and Jan.

By utilizing the maximum limit of Rs. 30 lakhs, one can get an annual cashflow of Rs. 2.4 lakh at an interest rate of 8.2%. On a quarterly basis, it would come to Rs. 60,000 which is a good interest rate given the current interest rate scenario. So, any senior citizen looking for fixed cashflow without any default risk can consider investing in this.

Armaan Joshi, Lead Editor, Forbes Advisor India

The Senior Citizens Savings Scheme is a sovereign-backed savings scheme that helps senior citizens of India above the age of 60 years to earn a secured interest on their savings aimed at retirement planning.

This scheme, which has a lock-in of five years, can help senior citizens generate an annual income of INR 2.4 lakh. The calculation via an SCSS calculator reveals simple interest income generation for this one-time deposit scheme: When an individual deposits to the tune of INR 8,80,000 spread over a period of five years, an interest rate of INR 3,60,800 can be earned if the rate of interest of 8.2% is taken into account. Based on this calculation, an annual income of INR 2.4 lakh annually can be generated.

After five years, the account holder can extend the scheme by another 3 years ensuring a sustained and stable monthly income.

Suman Bannerjee, CIO, Hedonova, a US based Hedge fund

To receive an annual income of 2.4 lakhs for 5 years, you would need to invest approximately Rs 8,10,100 in order to accumulate a total of 12 lakhs at an 8.2% interest rate compounded annually.

Bhuvanaa Shreeram, Co-Founder & Head of Financial Planning, House of Alpha

With the interest rate of 8.2% on the Senior Citizens Savings Scheme, we can calculate how much one needs to invest in the Senior Citizen Savings Scheme (SCSS) to generate Rs 2.4 lacs per annum.

Using the formula for simple interest:

Given:
Interest (I) = Rs 2.4 lacs
Rate (R) = 8.2% (or 0.082 in decimal form)
Time (T) = 1 year

I=Principal(P)×Rate(R)×Time(T)

Rearranging to solve for P:
P=I/(R×T)
Substituting in the given values:
P= Rs 2,40,000/0.082
P = Rs 29,26,829

Thus, to generate Rs 2.4 lacs per annum from the Senior Citizen Savings Scheme at an interest rate of 8.2%, you'd need to invest roughly Rs 29,26,829.27.

However, the SCSS has an upper investment limit of Rs 15 lacs. Interest in SCSS is paid quarterly. If you were generating Rs 2.4 lacs annually, you'd receive approximately Rs 60,000 every quarter. Given the upper investment limit, it's not possible to generate the entire Rs 2.4 lacs solely from an SCSS account. However, if there are two individuals over the age of 60, both can invest Rs.15 lacs each and together they can generate Rs.2.4 lacs per annum for the family. The investor might also consider complementing SCSS with other investment options to achieve that annual return. Alternatives include interest from Fixed Deposits in banks or corporates, Annuity plans from insurance companies, or Systematic Withdrawal Plans from mutual funds for generating regular income. Diversifying investments can enhance prospects of meeting their income goal.

Deepak Gagrani, Founder of Madhuban Finvest

Resident Indian senior citizens, looking for a reliable investment option should definitely consider the Senior Citizen Savings Scheme (SCSS). Backed by the government, this scheme offers a maximum deposit limit of INR 30 lakhs and a prevailing interest rate of 8.2%. With an investment duration of 5 years and an option to extend for another 3 years, you can earn an annual interest of up to INR 2.46 lakhs p.a. The extended account will earn interest rate prevailing at the time of extension.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.