Senior Citizens (born before 1965) are required to prioritize post-retirement income security, medical requirements and contingency planning. The following are detailed planning for Senior Citizens retired from job with their retirement compensation.
Near Term, just immediately turning 60 years: First and foremost, you need to invest the maximum allowed amount in Government-backed secured investment options like Senior Citizen Saving Scheme (SCSS) and Post Office Monthly Income Scheme (POMIS). Secondly, invest in a Corporate Fixed Deposit (FD) as they offer 0.50% extra to senior citizens i.e. up to 8.15%. Invest in different denominations so that in case emergency you can cancel one or two and continue the rest and earn interest on the same. Advisable to Fixed Deposit for 3 years and then renew it to earn a renewal interest rate up to 8.30% after 3 years.
Check that all traditional income taxable at the slab rate should not be more than 12.5% or max up to 15%.
Short Term: Balance amount to be invested in the Arbitrage Fund if the market is at its peak when you receive your retirement compensation, and switch to the Equity Fund when the market comes down for a longer period, say 2 weeks or 1 month, depending upon the exit load applicable in the Arbitrage Fund you had invested in. If the market is already down at the time of receiving the retirement compensation, invest in the Equity Fund straight away. Click on the Registration for MF DASHBOARD and then use Tier IV- Live MF Dashboard to get the list of suggested and curated Arbitrage and Equity Mutual Funds with a CAGR of more than 15% to 18%.
Medium to Long Term: Wait for one year from the date of investment Equity Mutual Fund OR from the date of switching from an arbitrage fund to an Equity Fund, to make the gain be long-term capital gain (LTCG) to take tax benefit on Rs.125000/- every year thereafter. Create a Monthly SWP (systematic Withdrawal Plan) Cycle of 1% (Yearly 12%) of your investment amount in each Equity Mutual Fund for let's say 144 to 180 instalments as per choice. The system allows you a maximum of 360 monthly SWP instalments.
Contingency Fund: If you are planning to keep a contingency fund for unforeseen medical expenses or other situations, then keep the money invested in the Arbitrage Fund.
Take the help of the following complete retirement planner to see the "what if" effect, including the tax impact and net take-home income. After finalising your plan and assigning a budget, download the report for further necessary action and discussion. If you need any assistance with getting it done for you, we are just a phone call away.
Special Financial Planning for Retirement: The Post-Retirement Net-of-Tax Income Planner is a simple interactive tool in one HTML page designed to help individuals plan and evaluate their financial readiness for retirement. It provides a structured framework to estimate post-retirement income streams, tax liabilities, and net disposable income. This calculator is suitable for employees, professionals, and investors who wish to consolidate their retirement corpus, allocate funds across various investment avenues, and understand the net monthly income available after accounting for taxes. Check your various retirement corpus components and your post-retirement Net-of-tax Monthly INCOME achievable from the total corpus.
USE THE FOLLOWING CALCULATOR