by Sanjeev Kumar Gopalakrishnan, Investing
03 Oct , 2018

Senior Citizens Savings Scheme an Important Element of Financial Planning

The risk-taking ability of senior citizens is less compared to the younger generation. The focus during the post-retirement scenario is to ensure that they receive enough monthly income to lead a comfortable life. Equally important is for them to decide the options they have to invest the money they receive when they retire. The stock market is considered more of a threat than a lucrative option for investment especially when you are in your 60s. Bank FDs are considered the safest but the returns are low. So, when you consider options that safeguard your retirement money yet deliver appreciable returns, Senior Citizens Savings Scheme is what comes across as a viable financial investment option. This scheme is considered one of the safest investment options and can also make way for regular income when in the 60s.

Unlike the stock market, Senior Citizens Savings Scheme protects your capital and your regular income is generated by quarterly interest on the amount you invest in the scheme. Moreover, this scheme is backed up by the most trusted source in India that is the Government of India. So let’s find out a little more about this scheme, shall we?

Which age-group can utilize this scheme?

This scheme is a boon to people older than 60 years looking for sound financial investment options. Everyone who has availed a voluntary retirement scheme between 55 and above are also eligible to invest in the Senior Citizens Savings Scheme provided they invest in this scheme within one month of their retirement. Even retired Defense Service employees are considered eligible for this scheme if they are of age 50 years or older.  However, this scheme is not applicable to Non-Resident Indians.  

Is there an upper or lower limit to the amount to be invested?

 A senior citizen can invest a maximum of 15 lakh rupees. The Ministry of Finance announces the current rate of interest for the scheme at regular intervals. Eligible people can invest in Senior Citizens Savings Scheme through pay order, demand draft or cheque at post-office or any other authorized commercial banks. The date of realization of cheque or DD is considered as the investment date

What are the benefits you can derive from this scheme?

The interest rate offered in this scheme is reviewed by the end of each calendar quarter. The current rate of interest is 8.3% p.a.  The deposit made in Senior Citizens Savings Scheme will be paid back after five years from the date of opening in the account. The scheme has tax benefits under section 80C; however, the income generated through this account is taxable.

A premature closure is allowed subject to completion of at least one year from the date of opening the account. A deduction of 1-1.5% is applicable for premature withdrawal of Senior Citizens Savings Scheme. In case of death of the depositor, no charges will be levied upon premature closure of the account.

Extension of the deposit

If the depositor wishes to extend the time for deposits after the maturity of five years, three years of further extension can be granted.  Suppose a depositor does not withdraw the amount after the maturity, then the interest rate applicable for savings account will be granted for the deposits.

Senior Citizens Savings Scheme – a beneficial scheme for retirement-stage investments

Senior Citizens Savings Scheme covers every aspect that a senior citizen looks for while evaluating financial investment options. Most importantly, tax deduction and premature withdrawal options are the merits of this scheme. It also has some demerits like the income generated through the scheme is subject to TDS. Be careful and read the rules and regulations before investing in the scheme. Always provide legitimate information and documents while opening such accounts to avoid closure of account mid-way at any cost.

PrognoAdvisor is your trusted online financial planning service from India, with extensive expertise in understanding your specific financial and life goals and guiding you achieve these goals with confidence. Connect with our financial advisors at to understand how you can simplify the entire process of personal financial planning in terms of both long- and short-term investments that help you achieve smart wealth creation and management, delivering, of course, some smart tax savings.

 About The Author

Sanjeev Kumar G, an IBS Chennai Alumni, is a Certified Financial Planner (CFP) from India, since 2005. He has 22 years of experience and is an expert in various personal finance areas like portfolio construction, investment research, life insurance and financial planning.


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