Investment Options For Retired

Of late, young people have started utilizing the time, they have at their disposal, to plan, re-plan, earn and invest for retirement. When you are young, you are likely to get hundreds of advices and suggestions on investment. However, this number keeps on decreasing with age and dwindles in the golden years. Once, you are retired, the hard reality awestruck you that the options of investments are limited with no more sustainable income.

At retirement one realizes that he has no luxury of enough investible years and watch money grow with time. The need of the hour is ensuring a regular income to meet day-to-day expenses with careful deployment of retirement benefits like provident fund benefits, gratuity, etc. in instruments that yield interest income at regular intervals.

Following are some strategies one can follow, according to your suitability, to get a steady income running into your pocket. While following strategies, you should be able to keep two most important factors — liquid income and capital protection.

STRATEGY 1

Get an immediate annuity out of existing corpus of provident fund, gratuity or your own savings, if you have any. Immediate annuity plans are provided by life insurance companies to help you earn a regular income out of your accumulated savings. Here, you have to pay just once and can choose the time span for regular income. The options include – lifetime annuity, guaranteed income for some years, or a joint life annuity, where income is provided till death of you or your spouse, whosoever lives longer.

However, before buying an immediate annuity, one must calculate the monthly expenses to be certain of the right amount of annuity payouts. In case, you have a larger corpus with you, invest it in liquid investment options such as short-term fixed deposits, liquid mutual funds or else let it remain in savings account for ease of use.

Following are some indicative immediate annuity options available:

STRATEGY 2

The other option is to rent out a part of your property. In case, you have large house or any property, lying vacant, you can rent it out to earn regular rental income, along with value appreciation of property. Renting out is always better than selling property, in case you have one, which is lying vacant and yielding no returns. There are also instances, where old couples have moved to smaller apartments, vacating their larger villas to let them out on rent. This option is feasible for you if your children have moved to other cities/ places and you are living alone with your spouse in that big house. This will be added advantage if you are living in a tourist place as many tourists and business houses are likely to be ready to pay hefty sums for renting your property.

STRATEGY 3

In addition of using your already earned income, you can also think of starting something fresh (new venture), so that you can earn and enjoy the things, which are left out in the hectic pace of life. Walking in this, many retirees are earning from their hobbies of painting, writing, pottery, etc.

After-retirement occupations can also be in the field in which you have gained expertise in your work life. For instance, financial analysts tend to start financial consultancies of their own. Similarly, teachers and educationists believe in starting their own educational institutes or joining coaching centres.

Here, all you need to do is to think how you would like to spend the rest of your life and then plan for finances, if you want to start a venture. Since retirees have required intellectual capital for sustaining themselves in high competition, only a limited amount of financial resources are needed to venture in.

Following are some options for retirees to build an income:

STRATEGY 4

Short-term liquid mutual funds, Fixed Maturity Plans (FMPs) and monthly income schemes are avenues to invest in different kinds of mutual fund and earn regular income, not guaranteed, from them. Here, liquid funds and FMPs park majority of their funds in debt-based securities such as central and state government bonds, bonds of municipal corporations and large public sector companies and banks. These funds provide guaranteed and safe returns.

On the other hand, income from the monthly income schemes is based on dividends announced by companies, which is not guaranteed or regular but may give comparatively better returns. It is advisable not to rely too much on equity-based schemes line monthly income ones and keep pumping out returns in a separate account, so that they can be used to meet other expenses. This kind of cash back-up helps in taking care of sudden expenses, without being dependent on your children.

STRATEGY 5

Short-term instruments like post office deposits, fixed deposits, senior citizens’ saving schemes and Monthly Income Schemes (MIS) of post office, etc. can also be looked at for earning regular returns as they offer fixed regular interest/ returns, which can be withdrawn on monthly basis. To invest in these avenues, one has to have a surplus capital to keep in these avenues and earn appreciation on it.

These deposits offer you guaranteed returns; however, inflation adjusted returns are on the lower side. With the current interest rates, these schemes are lucrative to invest in, lock-in your funds and get good returns in the future.

Also, a person can opt for non-cumulative option to take interest income along with the principal amount at maturity.

Following are some indicative interest rates of FDs:

With such options at hand, you need not to worry about generating a regular stream of income and can enjoy your after-retirement life at your pace and flow.