How to Plan your Retirement with Fixed Deposit Schemes

It’s a common misconception that a FD is an instrument of saving that is meant solely for youngsters. On the contrary, if you’re a retiree or a senior citizen, you can still invest in Fixed Deposits. There are various schemes offered by banks and NBFCs that cater specifically to the needs of senior citizens. These schemes can be used to park excess money, while gaining interest. These deposits in India can be opened by anyone who’s an Indian citizen or an NRI.

However, using an Fixed Deposit interest rate calculator will give you a heads up on how the tenure and interest levied can affect you.

Usually, a senior citizen’s FD scheme comes with many features. A few of them are:

• Same as a regular FD, these schemes too have deposit periods ranging from 7 days to 10 years
• There are nomination facilities available, under which the depositor can declare a nominee
• Senior citizen’s FD can be closed anytime, even prematurely
• The deposit period decides the interest rates offered under these schemes
• The interest rates on the FD are calculated on a quarterly basis. They can be added to the maturity value of the fixed deposit, or can be credited to your bank account
• The maximum amount of money that can be deposited under FD can be anywhere from Rs.1 crore upward. It’s up to the bank or NBFC to decide what the maximum limit will be
• A few of the FDs which have a lock-in period of 5 years, can prove to be tax-saving option for senior citizens, and can provide special interest rates to them

Interest Rates under FDs for Senior Citizens

Several Banks and NBFCs provide senior citizens special interest rates on their FD. That being said, you should remember that some lenders might have certain terms and conditions applied on these interest rates. These terms and condition may vary as per the bank or NBFC, but the general principle doesn’t change.

To avail these special interest rates you should ensure that the duration of your FD is more than 1 year. Short term deposits aren’t eligible for senior citizen interest rates. Also, instances where the account is opened as a joint Fixed Deposit, and the second account holder happens to be a senior citizen, these special interest rates will not be applicable.

A Few Benefits of Senior Sitizens FD Schemes

There are a plethora of benefits offered to retirees and senior citizens under Fixed Deposit schemes, some of them are:

• It allows your money to accumulate and grow steadily
• Many Banks and NBFCs provide higher interest rates, therefore resulting in better returns
• One of the salient features of these FD schemes is that the interest rate earned on them can be turned into monthly incomes, which is ideal for anyone who has retired
• The FDs meant for senior citizens can also turn out to be tax savers. The tax deductions can be claimed under Section 80C of The IT Act

There are many saving schemes meant for retired employees and senior citizens. But, finding the best Fixed Deposit scheme can be tedious if you don’t know what to look for. So, do your research and compare all the schemes you find, before signing on the dotted line.

If you had to choose between the Fixed Deposit and Saving Account, then it is certain that Fixed Deposits are better for generating higher income and savings accounts are ideal for financial liquidity. However, a combination of both of these investment vehicles make the most financial sense. So, do your calculations and arrive at what best suits your needs and gives you the maximum returns.