Does The Senior Citizens Savings Program Produce Enough Regular Income?

 Does The Senior Citizens Savings Program Produce Enough Regular Income?

Even while SCSS is the safest and one of the highest-paying fixed-income assets, it could not be enough to meet your needs in terms of money. Consider making investments in a variety of assets to maximize your rewards.

Because it offers better returns than fixed-income assets, the Senior Citizens Savings Scheme (SCSS) is a very well-liked financial tool among seniors. There is no chance of default because the government is backing it. Additionally, the distribution is carried out on a quarterly basis. In a nutshell, this strategy offers security, returns, and consistent income. What could be superior to this? Let's see if SCSS is sufficient to provide seniors with a reliable income or if they need to use a different investing strategy.    

SCSS In Summary

SCSS now offers annual returns of 8.2% in interest, which is higher than the average for fixed-income assets. Individual investments are limited to Rs. 30 lakh. Therefore, if your spouse also makes individual investments, your combined investment limit is Rs. 60 lakh. There is no option to invest money in installments; you must invest it all at once.

The five-year term may be extended by an additional three years. SCSS investments are open to anybody over the age of 60. Those who have chosen to retire voluntarily may begin investing at age 55.

To open a SCSS account, go to the nearby bank or post office.

Does it suffice?

The response is no! Let's assume the best-case situation. You each put in Rs. 30 lakh with your spouse. Interest is charged at an 8.2% rate. If things continue as they are, you will receive little over Rs. 120,000 per quarter, or Rs. 41,000 per month. You could find it lacking, especially if you live in a metropolis. Additionally, the effects of inflation may cause the income to appear meager after a few years.

What Would Happen If Interest Rates Rose?

With SCSS, the interest rate is fixed. For instance, if you invested in SCSS at 8.2% percent, you will continue to get that interest rate for the duration of the investment, even if it rises to 10% in the future. Despite the market's higher interest rate, you cannot sell your investment. Do you wish to pass up the enhanced benefit of the interest rate?

What Is The Answer?

To ensure that you do not lose out on the benefit if the interest rate rises, it is a good idea to invest in a variety of assets. The assets can be debt funds, high-grade corporate bonds, balanced or hybrid mutual funds, high-interest monthly income FDs, and relevant government programs.

Some banks give senior citizens interest rates as high as 9% annually. To earn a large return, you can diversify portion of your investment into these channels.

Last but not least, the SCSS is only designed to cover your normal needs. What about protecting your future financial security? The surplus corpus needs to be parked in investment opportunities with the ability to outperform the current inflation rate. After a few years, you can notice that your expenses are increasing as a result of inflation; at that point, your investments in other areas can assist you in meeting your regular financial needs. In order to ensure a continuous income, you must diversify it among several courses rather than relying simply on SCSS.