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4 Investment Plans for Senior Citizens

dateKnowledge Centre Team dateApril 22, 2021 views211 Views
4 Investment Plans for Senior Citizens

As far as the senior citizens and investments are concerned, there is only one scenario that is prevalent in India. The age above 60 years is considered unofficially to only get the ‘returns’ on the investments that one undertook during the working period. Be it any life insurance plan or other savings plan, most of them are invested in with intent to receive post-retirement benefits.

However, is it wise to just sit idle with cash? There are plenty of reasons to extend the financial planning that started at a young age to beyond the sixties. Generally, as one nears the retirement age, most of the requirements are met. For instance, senior citizens are usually debt-free, and their kids are settled. The parked money would be more than enough to meet the basic necessities.

Hence, it is sensible to pick a portion of idle money and look for investment schemes for senior citizens. The traditional FDs and savings plan only offers mild returns. In contrast, the newer schemes are much better with greater safety. Read on to get guidance on financial planning for senior citizens. After all, this is the golden age to utilize the wisdom gathered over the years.

Here is the list of 4 investment plans that can be considered by senior citizens:

1. Pension4life Plan

Financial independence in the post-retirement age is of utmost importance to live a tension-free, healthy life. To achieve expenditure discipline as per the need, it is rational to think of a guaranteed income scheme. This, along with financial independence, provides returns on the investment.

Canara HSBC Oriental Bank of Commerce Life Insurance brings Pension4Life saving plan. It provides annuity as per the choice of the investor. For the unaware, an annuity is a fixed payment instrument in return for a lump-sum premium. Based on the financial planning and lump sum payment, one can choose an amount to be received monthly/quarterly/half-yearly/yearly. Key features of this plan as follows:

  • The minimum age of entry is 45 years, while the maximum age is 80 years
  • Provides guaranteed lifetime income which is credited into the bank account
  • Comes with a choice for an immediate or deferred annuity with or without return of purchase
  • In total, there are 7 options under the plan for investment

The pension4life plan offers worthwhile annuity rates, which differ as per the option chosen. It is one of the best options of financial planning for senior citizens.

2. Guaranteed Savings Plan

As the name suggests, it is a savings plan that offers guaranteed additions to the cumulative annual premium paid. It’s yet another product offered by Canara HSBC Oriental Bank of Commerce Life Insurance. For senior citizens, the age of entry in this scheme is 60 years. One has to choose from payment premium terms of 5, 7, and 10 years to receive 8%, 10%, and 12% addition, respectively.

For the age of entry as 60 years, it comes in two variants: Guaranteed Savings Option and Guaranteed Savings with Double Protection Option. One unique feature of this savings plan is that it also gives death benefits like life insurance. Therefore, it is a better means of financial planning for senior citizens combining savings plus death benefits. Highlights of the Guaranteed Savings Plan as follows:

  • Gives guaranteed sum assured and guaranteed additions to the cumulative premium
  • Combines wealth creation and protection by providing a death benefit
  • Additional guarantees through high premium boosters
  • A loan can be availed against this savings plan
  • Maximum entry and maturity age is 60 and 75 respectively for senior citizens

All the above perks make it a great investment scheme for senior citizens.

3. Guaranteed Income4Life Plan

A highly customizable life insurance cum savings plan designed to meet the requirement of short-term, long-term, and lifetime income. Similar to the guaranteed savings plan, senior citizens can enter this scheme at the age of 60 years. Various payout options can be chosen if one wants to receive payment monthly, quarterly, etc.

Also, the premium protection feature takes care of any adverse events, keeping the policy benefits intact. In case of death, future premiums get waived off, and income payouts would be as decided earlier. Furthermore, it has additional benefits such as a loan facility, premium booster, and tax benefits. Guaranteed Income4Life plan comes with three options depending on the financial planning.

  • Guaranteed income: This plan provides income for a short-term period of 10 years.
  • Guaranteed long-term income: This plan covers income requirements for a period of 15 to 20 years.
  • Guaranteed lifelong income: Lifetime income is provided up to the age of 99 years. This option is the best-suited investment scheme for senior citizens. Also, it comes with an option to cover a spouse.

4. Invest 4G Plan

Invest 4G scheme by Canara HSBC Oriental Bank of Commerce Life Insurance is a life insurance savings plan. Along with the insurance protection, this scheme invests the savings into a portfolio option chosen by the policyholder. The portfolio comprises equity fund, debt fund, liquid fund, and other fund types. Therefore, it has the potential for providing aggressive returns.

ULIPs for planning your retirement

Invest4g plan scheme also offers added benefits such as partial, systematic, milestone withdrawal option. In case of death, the sum assured is paid immediately while the fund value will be paid on maturity. Based on risk appetite, it gives four portfolio management options.

  • Systematic transfer option: Systematic entry in the equity segment
  • Return protector option: Protects the returns from future market volatility
  • Auto fund rebalancing: Automatic balancing of the portfolio every three months
  • Safety switch option: Safely move the investment from equity to liquid fund

Invest 4G is an impressive investment scheme for senior citizens who want to have some equity investment.

It is pertinent to invest idle money in such excellent investment schemes for senior citizens. Although the income earned from these schemes is taxable, senior citizens have numerous tax benefits. Apart from making personal income, this can also be used to create a financial legacy and become a safety net for surviving family members.

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Frequently Asked Questions (FAQs) for Retirement and Pension Plans

The premium is one of the most important factors to consider before buying a policy. Many people buy a life insurance policy with a high sum assured but are unable to process the premiums for the entire premium payment tenure. You can get a better idea of the premium outgo with the Premium calculator available in the ‘Tools and Calculator’ section of www.canarahsbclife.com.

The Invest 4G plan offers three benefit options to choose from. If you have opted for the Life Option or Whole Life Option, the insurer will pay the nominee(s) death benefit if the policyholder meets with an unfortunate incident. However, in the Life Option with Premium Funding, the policy continues even after the death of the policyholder. The company pays the remaining premiums until the policy matures.

Life is unpredictable and so it is important to prepare for all eventualities. If you regularly save a substantial amount of your income for retirement, the corpus may expand to a comfortable level before retirement. In case you become disabled and are unable to contribute to the retirement plans, most plans will continue to multiply your savings. The amount already accumulated will continue to grow and besides the existing plans you can also choose to invest in pension schemes specifically designed for people with disability.

Investment in ULIPs like Invest 4G plan qualifies for tax deductions under section 80C of the income tax law. The maturity benefits of ULIPs are also tax-exempt under section 10 (10D) of the Income Tax Act, 1961. However, if the premium paid during the policy term is more than 10% of the sum assured, the maturity proceeds will be taxable.

The concept of early retirement is catching up fast in India, but there are no specified ages for early retirement. While in some western countries the age between 35 and 45 is considered favourable for early retirement, in India the ideal age is 45-50 years. With the right planning and investments, it is not very difficult to retire early.

At the age of 35-40, people generally have several responsibilities such as children’s education and various EMIs. It is difficult to spare a substantial amount of income for retirement. Depending upon the needs of the household and the lifestyle, one should aim to save around 40-50% of his/her income. Around 10% of the income should exclusively be allocated for retirement planning. Here are some tips to choose the best retirement plan.

  • Focus on your needs: It is easier to formulate a strategy when the goal is clear. Make an estimate of the amount required to sustain your life. Take inflation into account and zero in on the targeted corpus.
  • Research thoroughly: Conduct thorough research before investing in any financial product. Read the term and conditions properly and try to understand how an investment product fits your needs.
  • Consider different products: The market is awash with all kinds of investment products. Do not follow conventional advice as the need of every person is different. Take into consideration all the suitable products, conduct an objective analysis and then invest.

Owning a house is a cherished dream for many. There are several ways to save for a new house, but in urgent cases, people may be tempted to withdraw from their retirement fund. There are various financial products for retirement planning, and all have different withdrawal rules. In the case of the National Pension Scheme, partial withdrawals for special purposes like buying a house are allowed only thrice during the policy tenure. However, to avail the withdrawal facility, you should be an NPS investor for at least 10 years and you are permitted to withdraw only 25% of your contribution. If you have a PPF account, you can withdraw 50% of the accumulated amount, but only after staying invested for at least 6 years. The Invest 4G plan also allows partial withdrawals after five years of investment.

The quantum of monthly savings depends on the specific needs of the buyer. Financial advisors, however, suggest people save around 15% of the monthly income for retirement.

Retirement plans such as NPS have a very low entry threshold. It is also open to all and anyone can open an NPS account and start saving. A small business can also invest in Invest 4G plan from Canara HSBC Oriental Bank of Commerce for as low as Rs 5000 every month.

The choice between paying off a student loan or start a retirement account is not a difficult one. Starting early for retirement planning has its own advantages but extending the student loan will increase the interest burden. You will have to find a balance between the two. Try to pay off the student loan as soon as possible, but do not hold back on investing in a retirement account.

Most people nominate their spouse to receive retirement benefits in their absence. But a spouse is not automatically entitled to be the beneficiary of a retirement account owned by the other spouse.

Gold is a safe investment asset and investors often flock to the yellow metal to stabilise their portfolios. Holding a small quantity of gold can be considered as the intrinsic value of gold remains intact. You can also choose to have an exposure to gold through ULIPs. ULIP funds invest in a variety of asset classes and some fund options also have a small exposure to gold. You can choose fund options with gold to have a small and indirect investment in gold.

While there are no explicit rules barring the use of retirement account to finance real estate, it may not be advisable to do so. For instance, you are allowed to avail loan from the PPF account from the third financial year. The loan can be used to finance real estate, but it would defeat the purpose of having a dedicated retirement account.

While there are no explicit rules barring the use of retirement account to finance real estate, it may not be advisable to do so. For instance, you are allowed to avail loan from the PPF account from the third financial year. The loan can be used to finance real estate, but it would defeat the purpose of having a dedicated retirement account.

The government has allowed all central government pensioners to open a joint account with their spouses.

Vesting date or age signifies when your pension plan’s accumulation phase is over and the distribution phase can begin. For example, in a deferred annuity plan, you may have a vesting date which is 10 to 30 years away depending on your age at entry. You will continue to invest or stay invested till the vesting date. After the vesting date or age, you can start receiving the pension or withdraw the money from the plan.

The steps may differ from plan to plan. However, you can buy the online retirement plans following the steps below:

  • Retirement Calculator: Use a retirement calculator to estimate your corpus need and expected monthly investment amount to achieve it
  • Choose Plan: Select the online retirement plan you want to start investing in
  • Contact Information: Fill in the personal details including the contact information. Make sure to put the correct e-mail ID which you can access since all future communication about the policy will take place via e-mail.
  • Define Your Investment: Select the goal, investment term, investment frequency and amount you want to invest (based on the calculator estimate)
  • Select Fund Allocation: Online retirement plans give you the option to invest in multiple assets including equity funds. You can select the ratio in which your premium will be allocated to these funds as per your risk appetite. Then select one of the portfolio rebalancing strategies.
  • Select Withdrawal Plan: You can withdraw money based on set milestone or systematically from the plan after the lock-in period. Select the options for withdrawal as per your plan.
  • Review Plan & Investment Details & Complete the Application Form

You can pay the premium amount before or after completing the application form to start investing.

The best time to plan your retirement is when you are planning your career. However, this may not be the time when you really start investing money for your retirement. You must start investing in your retirement plan as soon as you start earning.

Retirement is the only financial goal you cannot repair with other means of funding like a loan. Thus, developing the habit of investing with every income you have is the best way to have a comfortable retired life.

Insurance allows your family, especially your dependent spouse to continue living without financial worries if anything happens to you. Also, insurance may help you save enough for retirement in case of permanent disabilities. Additionally, life insurance retirement plans allow you to build a good retirement corpus with bonus additions.

Yes, you can change the nominee of the policy anytime you need. If you are using an Electronic Insurance Account (EIA) to manage your policies, you can change the nominees anytime from this account. Otherwise, you can contact the customer care to update the nominations on your policy.

You can opt for auto-debit of the premiums from your savings account. You can also pay the premiums online using your debit card, credit card or a payment wallet.

You can get Rs. 1 Core pension plan using the online retirement calculator. The calculator will assess your eligibility and provide you with the probable monthly or annual investment to achieve the goal. If the amount seems feasible you can complete the purchase online or set an appointment for a qualified advisor to help you in the process.

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