Reports sourced from United Nations Population suggest that the Indian senior citizen population will reach 173 million by the end of 2026, which would account for approximately 12% of the country’s population.
Compared to others, senior citizens rely on limited sources of income and hence require financial products with added benefits to mitigate their finances. To account for such demands of the elderly population, financial institutions offer investment tools at attractive fixed deposit rates for senior citizens.
Senior citizens prefer investing in fixed deposits as these schemes offer substantial interest rates and guaranteed returns. These individuals are generally on the brink of retirement or have already retired. Hence, opting for an investment scheme that offers maximum security is a key towards securing financial stability in their twilight years.
Advantages of investment in FDs for senior citizens –
Attractive rate of interest
NBFCs like Bajaj Finance offer attractive Fixed Deposit rates for senior citizens of up to 8.35%. This is significantly higher compared to traditional savings but they are generally term specific.
Flexible tenor
The tenor of senior citizen FD accounts is quite flexible in nature. Applicants can opt for a tenor ranging between 12 months to 5 years. Longer the tenor of your FD higher will be your interest rate.
Income tax benefits
Under Section 80C, fixed deposit accounts of a minimum tenor of 5 years provide tax exemption. However, depositors cannot avail any withdrawal facility before the 5 year lock-in period.
Minimal deposit amount
Senior citizen FD accounts can be opened with minimal deposits and do not require a large starting amount. Applicants can create a senior citizen FD account by depositing Rs.25,000 and avail the benefits.
Nomination facility
Senior citizen FD accounts offer a nomination facility that provides further security of funds. Depositors can nominate their spouse or children who will be able to claim the amount upon maturity. In case of early death of the depositor, the amount will be disbursed to the nominees in the time of maturity.
High-value deposits
Since the specified limit to the amount invested in senior citizen FDs is significantly high (up to Rs.5 crore) it is a great opportunity for depositors to invest their life savings and expect guaranteed ROI at maturity. With the help of a fixed deposit calculator, you can manage your finances easily.
Assured returns
Since your return on investments on FDs is guaranteed, it is a major beneficial element for senior citizens to invest their money and let it grow at a steady pace. Moreover, fixed deposit rates for senior citizens are immune to market fluctuations and other dynamics that influence change in investment policies.
Premature withdrawal facility
During a financial crisis, senior citizens can avail the premature withdrawal facility of their fixed deposit accounts. Depositors will only have to pay a nominal penalty fee to make such withdrawals. This penalty fee varies across different financial institutions but it is generally 0.5-1% depending on the fixed deposit amount.
Unlike EPF and PPF accounts, the facility of premature withdrawal provides financial stability in case of FDs with log tenors.
Loan against FD
Senior citizens can also apply for a loan and secure it by pledging the funds in the FD account as collateral. Such loans offer flexible repayment options starting from 90 days to the remaining tenor of the FD account.
NBFCs offer best fixed deposit scheme, where you can avail a loan up to 75% of the amount in a cumulative FD and up to 60% for a non-cumulative FD.
FDs are considered among the top recommended investment schemes for senior citizens. Senior citizens can apply for an FD online by visiting the website of the financial institution at the comfort of their desired time and place.