The Senior Citizens Savings Scheme (SCSS) is a government-supported initiative designed exclusively for senior citizens seeking a steady income stream during their retirement years. Individuals aged 60 or older can initiate an SCSS account at a bank or post office by depositing a minimum of INR 1,000 and a maximum of INR 30 lakh.
This account comes with a 5-year maturity period, making it eligible for tax benefits as per section 80C of the Income Tax Act of 1961. Senior citizens can enjoy an attractive 8.2% annual return on their SCSS investments, paid out quarterly. Let's delve into insights from industry experts on how elderly individuals can secure an annual income of Rs 2.4 lakh over five years.
Shruti Jain, Chief Strategy Officer, Arihant Capital
The Senior Citizens Savings Scheme (SCSS) is a government-backed savings option tailored for Indian seniors aged 60 and above. It offers a secure and regular income source, making it ideal for retired individuals seeking low-risk investments with the added benefit of tax savings under section 80C.
By investing Rs 30 lakhs in SCSS, investors can achieve an annual income of Rs 2.4 lakhs. The interest on this deposit is disbursed quarterly. This single deposit scheme operates on a simple interest income principle. Therefore, a Rs 30 lakh investment yields Rs 61,500 per quarter at an 8.2% annual interest rate.
Previously, the maximum investment limit was Rs 15 lakhs. However, the Budget 2023-24, presented by Finance Minister Nirmala Sitharaman, doubled the SCSS deposit cap from Rs 15 lakhs to Rs 30 lakhs.
Furthermore, after the initial five-year period, account holders can extend the scheme for an additional three years, ensuring a consistent and dependable monthly income.
Amar Ranu, Head - Investment Products & Insights, Anand Rathi Shares and Stock Brokers
The Senior Citizen Savings Scheme (SCSS) is a government-backed plan catering to senior citizens for a five-year duration, extendable for another three years at the prevailing rate. The scheme allows a maximum investment of Rs. 30 lakhs, offering an 8.2% interest rate. Investors can also claim an income deduction under Section 80C of the IT Act, up to Rs. 1.5 lakhs, by investing in SCSS.
Investors can opt for a quarterly payout, fixed on the first day of April, July, October, and January. By utilizing the maximum Rs. 30 lakhs, one can secure an annual cash flow of Rs. 2.4 lakhs at an 8.2% interest rate. On a quarterly basis, this translates to Rs. 60,000, an attractive rate given the present interest rate scenario. Hence, senior citizens seeking fixed cash flow without default risk should consider this investment.
Armaan Joshi, Lead Editor, Forbes Advisor India
The Senior Citizens Savings Scheme is a government-backed savings avenue empowering Indian seniors aged 60 and above to earn secure interest on their savings, particularly for retirement planning.
This scheme, featuring a five-year lock-in period, can help senior citizens achieve an annual income of INR 2.4 lakhs. Calculations using an SCSS calculator demonstrate simple interest income generation for this one-time deposit scheme. Depositing INR 8,80,000 over five years, considering an interest rate of 8.2%, could yield INR 3,60,800. Consequently, an annual income of INR 2.4 lakhs can be generated.
Following the initial five-year tenure, account holders can extend the scheme for an additional three years, ensuring a consistent and stable monthly income.
Suman Bannerjee, CIO, Hedonova, a US-based Hedge fund
To secure an annual income of 2.4 lakhs for five years, an investment of approximately Rs 8,10,100 is required. This sum accumulates to a total of 12 lakhs at an 8.2% interest rate compounded annually.
Bhuvanaa Shreeram, Co-Founder And Head of Financial Planning, House of Alpha
Considering the 8.2% interest rate offered by the Senior Citizens Savings Scheme (SCSS), one can calculate the required investment to generate Rs 2.4 lakhs annually.
Using the formula for simple interest:
Given:
Interest (I) = Rs 2.4 lakhs
Rate (R) = 8.2% (or 0.082 in decimal form)
Time (T) = 1 year
I = Principal (P) × Rate (R) × Time (T)
Rearranging to solve for P:
P = I / (R × T)
Substituting the given values:
P = Rs 2,40,000 / 0.082
P = Rs 29,26,829
Thus, to generate Rs 2.4 lakhs per annum from the Senior Citizens Savings Scheme at an 8.2% interest rate, an investment of approximately Rs 29,26,829.27 is required.
Nevertheless, the SCSS imposes an upper investment limit of Rs 15 lakhs. Interest is paid quarterly. For an annual income of Rs 2.4 lakhs, one would receive roughly Rs 60,000 every quarter. Given this limit, it's not possible to generate the entire Rs 2.4 lakhs solely from an SCSS account. However, if two individuals aged over 60 invest Rs 15 lakhs each, they can collectively generate Rs 2.4 lakhs per annum for their family. Additionally, investors may consider diversifying their portfolio with other options like Fixed Deposits, Annuity plans, or Systematic Withdrawal Plans to meet their income goals.
Deepak Gagrani, Founder of Madhuban Finvest
Indian senior citizens in search of a dependable investment option should seriously consider the Senior Citizen Savings Scheme (SCSS). This government-backed scheme allows a maximum deposit of INR 30 lakhs, offering an attractive interest rate of 8.2%. With a five-year investment horizon, extendable by three years, investors can earn an annual interest of up to INR 2.46 lakhs p.a. The extended account will accrue interest at the prevailing rate.
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