Retirement is an ending stage of your professional life, but it
doesn't have to be an end to your desires from being fulfilled. To retain the
value of your portfolio, you must consider a few factors like monthly expenses
and inflation protection. A well-planned retirement needs a strategic
investment that provides fruitful results over time.
Retirement plans provide access to a lump sum
amount that has been accumulated over the years. Additionally, other saving
schemes have provided enough funds to make the most of the golden years.
Majority of your investment plans would be
taxable in nature. It is imperative to strategize your employed funds and
income from investments to minimize taxation.
Retirement incomes and taxes:
There are various sources of income after retirements such as rent, capital gains, interest or dividend, and the equity investments in place of a fixed monthly salary. Even if you are receiving pension amount, you must pay tax depending on the payout frequencies.
Government
employees receive a lump sum pension which is commuted and doesn’t require
paying taxes. However, for the
non-government employees, if you have taken a gratuity facility, one-third
pension is tax exempted. In case you have not availed gratuity, only half
amount is exempted.
Investment in the retirement funds:
Retirement
is the phase where you are dependent on the savings for your livelihood. Before
reaching this phase, you have to plan for growing your save-up funds by
investing prudently. The following
factors keep in mind while investing:
●
Returns
●
Liquidity
●
Payout frequency
You
must plan for capital appreciation and safety that will affect your returns as
these can cross the limit of Rs 2.5 lakhs income tax exemption limit easily.
Here are some investment options
which can help you to protect your retirement savings from taxes:
1.
Fixed Deposits:
Fixed
Deposits is always the safest option to save taxes. 5-year tax saving deposits
with banks do not require the final maturity amount to be disclosed in tax
filing. The fund deposited in a Tax-saving fixed deposit is eligible for tax deduction under Section 80C.
Though
company deposits are not tax-free, they offer flexible interest payouts and
gain from higher interest rates for the senior citizens. Senior Citizen Fixed
Deposits from Bajaj Finance offer an interest rate of 9.1%. It is a secure
investment option which generates a higher rate of return as compared to the
savings accounts or other fixed-income investments.
If
you need a greater flexible tenor, choose the non-cumulative fixed deposit for
maximum return.
You
can avail loan service against your fixed deposits up to 60% of your maturity
amount. Bajaj Finance FD offers up to 75% of the maturity value as loan.
2.
Public Provident Fund
(PPF):
This
is one of the preferred options to park your money. You can deposit up to
Rs.1.5 lakhs in the whole year which comes under tax deductions. After
completing seven years, you can withdraw some amount not exceeding 50% of your
corpus.
3.
Senior Citizens Savings
Scheme (SCSS):
As
the name suggests, it is a savings plan specially designed only for the senior
citizens with an interest rate of 8.7%. You can make an investment of up to Rs.
15 lakh under this scheme. This offers a tax deduction. SCSS has a tenor of
five years which offers quarterly interest payouts.
4.
Equity Linked Savings
Scheme (ELSS)
Under
ELSS, you can deposit Rs.1.5 lakhs each year and have a lock-in period of only
three years. All returns earned are tax-free. This scheme offers capital growth
and tax-free returns. Being linked to equity markets, it carries a high amount
of risk on the value of the funds.
5.
Investing in balanced
mutual funds:
Some
balanced mutual funds invest partially in the equities and debt instruments.
You can also select Debt Mutual Funds for their lower risk and tax-free nature.
They invest 35% of funds in government and corporate bonds, hence are safer
than ELSS.
To create a continuous stream of income, you
can create fixed deposits with differing maturity timelines and ladder your
returns. Bajaj Finance FDs are safe and stable investment options certified
with ICRA’s Rating (MAAA Stable Rating)
and CRISIL’s FAAA/Stable rating.
