Retirement signifies the end of your constant income source. Thus, financial planning is important for you to maintain a good living standard. When you invest as a senior citizen, the major goals you must concentrate on are minimal risk and assured returns. To attain both these benefits, you must ensure to open a senior citizen savings account. Only then can you protect the funds that you have saved throughout your career. Though there are various senior citizen saving schemes, a fixed deposit is the most popular option to opt for once you open a savings account.

From offering investment safety to assured returns, opening a fixed deposit comes across as a safe haven for your post-retirement years. Owing to such reasons, many approaching retirement or those with risk-averse behaviour must opt for this option of protecting their wealth. Read on to understand what makes the fixed deposit route an ideal financial instrument for senior citizens.

  • Offers a comparatively higher interest rate

Typically, fixed deposit issuers offer a comparatively higher fixed deposit rate for senior citizens. For example, Kotak Mahindra Bank offers an additional interest rate of 0.50 per cent on senior fixed deposits and the highest fixed deposit rate of 7.70 per cent. Also, with Kotak, you can open a fixed deposit account with an amount as low as Rs 5,000.

  • Option to earn monthly income

You can choose to receive interest constituent on your fixed deposit monthly. As you have a limited source of income, going for the monthly income route allows you to receive a stable flow of funds to your account to manage your monthly expenses.

  • Secure investment route

A fixed deposit is primarily considered a secure investment choice. Investing in risky investment routes may be unfavourable, particularly for senior citizens. Guaranteed returns make this a safe investment product. Assurance of monthly income and safety assist you in accurately planning your retirement finances.

  • Tax benefits

If the fixed deposit income is equal to or less than Rs 50,000 in a financial year, then you do not require paying any taxes according to Section 80 TTB. You can also claim an income tax deduction of up to Rs 50,000 if your income surpasses the exemption limit.

  • Premature withdrawal

You can withdraw your fixed deposit prematurely at any specific time, particularly if you require immediate funds. Once you submit the request for premature withdrawal, the bank will deposit the fixed deposit amount directly to your linked online bank savings account. However, note that the bank might penalise you for the premature withdrawal.  

Ending note

If you are 60 years or above, then a fixed deposit account is one of the best senior citizens saving schemes available in the market. Leading financial institutions including Kotak Mahindra Bank offer term deposit options with a unique fixed deposit rate of interest. Additionally, you as a senior citizen can even enjoy tax benefits in your fixed deposit account. To be eligible to apply for the senior citizen fixed deposit account, you must be over 55 years of age and keep handy your identity proof and address proof.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.