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6 investment options for the retired

Fortunately, there are now a few different ways in which Indians can earn lifetime income after retirement. Click here to know 6 such top income options for retired.

  • 3,660 Views | Updated on: Jan 15, 2024

Summary

While there is no shortage of investment options in India, the ones that can offer a steady source of income throughout your life after retirement are few. This post is dedicated to 6 such lifetime income options.

Content

As Indians now recognize the need to save and invest for the future, retirement planning is one of the most common life objectives. While the monthly salary would stop after retirement, one should look for ways to continue receiving a steady income in their post-retirement years.

Fortunately, there are now a few different ways in which Indians can earn lifetime income after retirement. Here are 6 such top income options-

1.) Pension Plans

One of the easiest ways to receive guaranteed income throughout your life after retirement is by purchasing a retirement pension plan. With these plans, policyholders will continue paying a fixed premium every year throughout their working life. The premium amount is invested in a fund chosen by the policyholder.

After retirement, the policy provider will then start paying regular pensions to the policyholder throughout their life. Some of the pension plans also come with life insurance cover and multiple rider options for enhanced security.

2.) EPF and VPF

Employee Provident Fund and Voluntary Provident Fund are also excellent options to generate steady income in the form of regular pension after retirement. Like private pension plans, salaried professionals continue investing a fixed sum from their salary to their PF account. The investment earns compounded interest every year.

In the case of EPF, even the employer has to contribute a matching amount to the employee’s EPF account. The investment can be fully or partially withdrawn on retirement.

3.) NPS

The NPS or National Pension Scheme is a voluntary retirement scheme backed by the Government of India. Managed by the Pension Fund Regulatory and Development Authority (PFRDA), it allows every Indian citizen between 18 to 65 years to contribute towards their retirement throughout their working years.

In NPS, 60% of the corpus is deposited into the bank account of the applicant once he/she is 60 years old. The remaining 40% is used for purchasing annuity products which then generates a steady retirement income.

4.) SWP in Mutual Fund

Most mutual fund schemes in India now also offer SWP or Systematic Withdrawal Plan. With this facility, an investor gets to choose an amount they’d like to withdraw from their mutual fund investment at fixed intervals.

One can continue investing in a mutual fund scheme of their choice throughout their working years and then use the SWP facility to receive regular income after retirement.

5.) Fixed Deposits

Even FDs are an excellent way to receive lifetime income after retirement. Most financial institutions now offer the option of monthly interest payments on FD accounts. After reaching retirement, one can open an FD account and use this facility to earn a regular income.

For instance, a retiree can invest Rs. 10 lakhs in an FD account that generates 6% p.a. In one year, this FD account will generate Rs. 60,000 as interest income. By using the monthly payout facility, the retiree can receive Rs. 5,000 per month.

6.) Stock Investments

While this is not the steadiest form of retirement income, it can definitely be part of the overall retirement portfolio. Many of the companies have a reputation for paying dividends to their investors. One can invest in the stocks of these companies during their working life to continue earning dividends even after retirement.

But note that the dividend payouts are not guaranteed, and stock investments come with a significant level of risk.

Living a Financially Stable Retirement Life

While the monthly salary will cease to exist after retirement, expenses will continue throughout life. Moreover, due to inflation, the cost of essential goods and services will only rise significantly in the future. This is one of the primary reasons why one should start planning their retirement from an early age.

If earning regular income throughout your life after retirement is what you are looking for, these six options are definitely worth considering.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors