Best Savings Options for Senior Citizens

Financial planning is an important part of life, irrespective of age or financial status. With inflation and cost of living on the rise, it becomes crucial for senior citizens to start planning for their retirement. 

There are a number of savings and investment instruments available in the market. Senior citizens can choose one or a combination of these instruments to effectively manage their finances. 

An ideal financial instrument is one that suits your financial needs and goals. Here are some popular financial instruments and their key features to help you make an informed decision. 

  • Senior Citizen Fixed Deposits 

A fixed deposit (FD) is one of the most popular savings instruments in India. With an FD, you can make a lump-sum deposit at a predetermined interest rate for a specified period of time. It is relatively risk-free and offers assured returns. An FD is not swayed by market conditions and is ideal for risk-averse individuals.

A senior citizen fixed deposit is open to Indian citizens over the age of 60. Generally, these FDs offer an additional interest rate of anywhere from 0.25% to 0.75% per annum over the applicable rate of interest. With a Bajaj Finance FD, senior citizens can get an interest rate of up to 8.20% per annum. 

Many senior citizens opt for a non-cumulative FD as it provides them with an additional source of income. A fixed deposit is also quite liquid in the sense that it can be withdrawn at any point in time. However, usually, premature withdrawals will attract a 1% penalty.

  • Senior Citizen Saving Scheme (SCSS)

There are a number of senior citizens post office schemes. One such scheme is the Senior Citizen Saving Scheme. Under this scheme, Indian citizens over the age of 60 can deposit up to ₹15 Lakhs with the post office. 

This scheme is also available to individuals between the ages of 55 and 60 who have opted for  Voluntary Retirement Scheme (VRS) or Superannuation. Retired defence personnel between the ages of 50 and 60 are also eligible for this scheme. 

The applicable interest rate on SCSS for the first quarter of FY 2023-24 is 8.2% per annum. This rate is subject to quarterly review. 

The interest accrued is paid out quarterly, with no option to reinvest accrued interest. This is because the SCSS is specially designed to provide senior citizens with a regular source of income. 

The investment period for SCSS is 5 years. Post 5 years, you can make a one-time extension for a period of 3 years. 

The SCSS also allows for premature withdrawal. However, a premature withdrawal penalty of 1% to 1.5% will be applied. 

  • Pradhan Mantri Vaya Vandana Yojana (PMVVY)

Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a retirement pension scheme that is designed to benefit senior citizens. This scheme is managed by Life Insurance Corporation (LIC), under the purview of the Indian government. 

Indian residents over the age of 60 are eligible for this scheme. The investment period for PMVVY is 10 years. Currently, senior citizens can invest anywhere from ₹1.5 Lakhs to ₹15 Lakhs, at a rate of 7.4% per annum. The pension is paid out monthly, quarterly, half-yearly or yearly, as indicated by the term holder. 

Additionally, investors of this scheme can avail of a loan of up to 75% of the purchase price after completion of three years. 

  • Mutual Funds 

Mutual funds are one of the most common investment instruments available in the Indian market. Unlike other financial instruments discussed above, mutual funds do not offer assured returns. 

Mutual funds are subject to market conditions and therefore, bear some risk. However, this exposure to the market also makes way for higher returns and an opportunity for wealth creation. 

Senior citizens should be careful while choosing mutual funds as they bear higher levels of risk. A good place to start would be short-term debt funds. These funds invest in bonds that lend to reputed companies and corporations for a period of 1 to 3 years. 

Other options include gilt funds, conservative hybrid funds, ultra short-term funds, etc. 

  • Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme is offered by India Post, also known as the Department of Post. Though this scheme is open to all Indian citizens over the age of 10, it is a popular savings choice among senior citizens. This is because POMIS provides retired senior citizens with a regular source of income. 

The POMIS offers its investors with a monthly income through its monthly interest payouts. You can get started with your POMIS investment with ₹1500, which makes this scheme accessible to a large number of people. You can invest a maximum of up to ₹4.5 Lakhs for a single account and ₹9 Lakhs for a joint account. 

The investment tenure for this scheme is 5 years. While premature withdrawals can be made, they will come with a premature withdrawal penalty. 

Under this scheme, investors get assured returns of 7.40% per annum for the first quarter of FY 2023-23. This interest rate is subject to review every quarter. 


Retirement planning is one of the most crucial steps that we take in our financial journey. Planning our retirement can help us enjoy our retirement without worrying about finances. Here are some activities that many people undertake ahead of retirement to manage their finances effectively: 

  • Creating alternative sources of income 
  • De-risking existing portfolio 
  • Investing into low-risk fixed income financial instruments such as FDs


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