Senior citizens often choose Fixed Deposit schemes because they offer stable and guaranteed returns in the golden age. However, most also invest in FD schemes because they offer better interest rates.
The FD interest rates for senior citizens are slightly higher than those for general citizens. In this blog, we will explore the FD interest rate for senior citizens and the benefits of investing in Fixed Deposits.
Understanding FD interest rate for senior citizens
Banks and financial institutions offer special FD schemes for senior citizens to generate more income in their retirement years. Senior citizens often rely on fixed-income sources for their financial needs.
That is why the FD interest rate for senior citizens is generally higher. This can help them better manage their finances and other needs. Here are some of the crucial features of senior citizens FD:
- These Fixed Deposit schemes generally come with a tenure of 7 days to 10 years.
- The FD scheme also offers a nomination facility where senior citizens can nominate a person while making an FD.
- The FD interest rate for senior citizens can be decided based on the duration of the term deposit.
- The interest is compounded quarterly and can be credited to the account or included in the maturity value of the FD.
Also Read: Axis Bank FD Interest Rates
Benefits of investing in Fixed Deposits for senior citizens
Here are some of the main benefits of investing in Fixed Deposit for senior citizens:
Higher interest rates
One of the benefits of investing in Fixed Deposits for senior citizens is higher interest rates. Banks and other financial institutions generally offer 0.5% higher rates than regular rates for general citizens.
Flexible tenure
Another crucial benefit of investing in Fixed Deposits for senior citizens is that they offer flexible deposit tenures, which can range from 7 days to even 10 years. This allows senior citizens to choose their tenure based on their financial requirements and goals.
Regular income stream
Most senior citizens generally prefer to invest in FD schemes because they are looking for a regular income stream in their retirement years.
The steady income helps cover daily expenses and manage healthcare costs, making FDs a reliable and low-risk option for preserving and growing their retirement funds.
Tax benefits
Another crucial benefit of senior citizens’ FD is that it offers tax exemption under Section 80TTB of the ITA. Under the act, senior citizens are allowed to claim TDS exemption up to ₹50,000 on the profit or interest earned from FDs with post offices or banks.
Guaranteed returns
Senior citizens generally opt for secure investment options with guaranteed returns to ensure financial stability during their retirement years.
Since they often have a fixed income and lower risk tolerance, investments like Fixed Deposits offer a reliable way to grow their savings without the uncertainty associated with more volatile options.
Conclusion
When it comes to investing for retirement, FDs are the smartest choice for senior citizens. The FD interest rate for senior citizens is higher than that for regular citizens, which provides them with better returns on their investments.
This higher interest rate ensures that they can generate a steady and reliable income stream, which is crucial for covering their living expenses and healthcare costs during their retirement years.