4 tax-saving investment tools for senior citizens

4 Investment tools to save money for your retirement!

taxsaving investment tools

If you are a senior citizen and retired, you must be looking for investment avenues. It is a nice idea to start your tax-saving investments at the beginning of the financial year. If you start early, you will be able to manage your tax-saving investments. Senior citizens get better returns on FDs and some other investment avenues. Here we highlight four investment tools to help you plan your investments to save taxes. 

Related:  Build a Rs 25 crores retirement fund in 30 years with a monthly SIP of Rs 36,110

4 tax saving investment tools for senior citizens

The four tax-saving investment tools for senior citizens are:-

  1. Tax-free bonds- Tax-free bonds are a good investment avenue to save tax and earn good returns that are guaranteed. The returns will outperform inflation, and you will save tax at the same time. If you are in the higher tax brackets, tax-free bonds will be a good investment option for you.
  2. 5-Year Tax saving FDs- These FDs have a lock-in period of 5 years. These FDs provide taxbenefits under section 80C of the Income Tax Act. Tax-saving FDs provide triple benefits- risk-free returns, tax deductions, and deposit safety by DICGC. 
  3. Senior Citizen Saving Scheme (SCSS)- These deposits offer tax benefits under 80C with higher interest rates than the tax-saving FDs. The maximum amount that you can invest is Rs 15 Lakhs, and the minimum amount is Rs 1000. At present, the interest rate offered under SCSS is 7.4% which is higher than tax-saving FDs. You need to be over 60 years of age to open an account. 
  4. National Pension Scheme (NPS)- It is a voluntary pension scheme regulated by the PFRDA. This scheme provides exposure to both debt and equity. It is an EEE scheme which is exempt from taxes. The entire withdrawal amount is exempt in the hands of the investor. You can choose to claim the withdrawal amount as a lump sum or in the form of monthly pensions. The current interest range is 8-10%. 

Related: Insurance for senior citizens- Is it worth it?

When to start planning?

If you are retired and a senior citizen, you should start investing in these tax-saving instruments immediately. Also, you should not wait until the end of the financial year and invest at the beginning of the financial year only. This will ensure that you meet your targets and you save the maximum amount of tax possible. Also, you should understand that tax savings and investments develop as habits over time. So, you should not abandon the process after a few years. Also read about the 7 investment plans for senior citizens that offer high interest rates

13 Exclusive Benefits Available to Senior Citizens In Income Tax

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.


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