Retirement is a time to sit back and enjoy the rewards of years of hard work. If you are a retired individual, or simply wish to plan a secure future, this article will shed light on how an FD or fixed deposit can help you in your journey.
After a salaried employee of a company retires from his employment, it becomes essential for him to have savings account that he can rely on for monetary resources. This is where the concept of an FD or ‘Fixed Deposit’ comes in. Now, the first thing to consider concerning a fixed deposit is the FD interest rate of various financial institutes.
Which Retirement plan is more beneficial? How does a retirement FD operate? These are some of the questions that you might be wondering about before you choose a retirement plan and create a fixed deposit for your future.
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Mon 18 Nov. 2024
What investing in a fixed deposit for retirement entails is the act of keeping aside an amount of money that will act as security for the future. This money will help you meet your needs in the future or in case you face any financial dilemma or any risks like market fluctuations, healthcare needs, inflation, etc. When discussing the topic of the FD interest rate, the State Bank of India stands out as the SBI FD interest rates appear more attractive than others.
For individuals who have retired from their employments, it is vital to make proper use of their retirement amount to curb tax obligations and receive a regular income.
There are numerous fixed deposit plans or schemes which can be beneficial for achieving future goals. Bank fixed deposits have several advantages, being one of the most preferred options for retired professionals. These schemes come with ample security with guaranteed returns and reliability. Unlike many other investment schemes, bank deposits also have flexibility in terms of choosing your preferred timeline, i.e. 1 year, 2 year, 5 years or 10 years among other durations. The payouts from the scheme may be taken on a monthly, quarterly, half-yearly or annual basis. You may also choose to reinvest the interest and take the maturity amount in the future. It is all up to you and there are specialized tax-saver FDs which have lock-in periods of 5 years. You cannot withdraw from these FDs before the expiry of the tenure although they will give you handsome tax benefits as well.
- How FDs can help a retiree?
Retirement refers to the end of an individual’s earning period. However, this does not mean that it is also the end of expenses for the said individual. This is why FDs or fixed deposits are regulated by employees throughout their working period so that they don’t face monetary inconsistencies after they retire.
- Fixed deposits ensure a fixed income- A retired individual does not enjoy the chance to depend on monthly salaries. Hence, he has to think about his retired life beforehand. This is when an FD or fixed deposit comes into the picture. This is used to rely on after the retirement of an individual to utilize according to need.
- Generating a fixed deposit is cheap- The amount that is required to create an FD or fixed deposit in a financial institution is reasonably low, irrespective of your age or income. This is why it is an easily accessible and viable investment option for all.
- Tax incentives for Senior citizens- Many financial institutions offer a fixed FD interest rate to the deposits created by senior citizens. As a result, FDs or fixed deposits come with a fair share of tax incentives for senior citizens and retired individuals.
- Diverse form of investment- FDs or fixed deposits are the most diverse forms of investment. They are as easily manageable as they are created. One can create several fixed deposits and also decide their timelines. Therefore, FDs prove to be a suitable way to expand one’s investment portfolio as they reach their retirement age at about 60 years.
- Loans are available easily- Creating an FD or fixed deposit also makes it easier for you to take out a loan from a financial institution. In the case of healthcare or other emergencies, an individual shouldn’t take out their long-term savings. In such cases, he or she can simply opt to take a loan against their existing fixed deposits. The interest rate extended to you on a loan you acquire against your FD is much lower than other conventional loans. This makes it much more convenient and easy to pay it back.
- Conclusion:
As a retired individual, it becomes a vital decision to choose a retirement plan and execute it. Every individual needs to know the details concerning all retirement plans to make a well-informed decision regarding his future.
