Seniors on the verge of retirement, or otherwise, need a fixed income to survive and support themselves independently and with respect.
Fixed deposits are one of the safest forms of investing for those looking for a long term plan.
The main reason is that interest rates and yields on fixed deposits are not subject to market fluctuations.
For seniors, a slightly higher interest rate is offered on fixed deposit investments.
Main characteristics of fixed deposits for the elderly
The minimum and maximum deposit amount – depends from one bank to another
Tax deduction – can claim a deduction of up to 50,000 on interest income earned. Also, filling out Form-15H can save them from the TDS deduction, withholding tax.
Loan against FD – Seniors can get a loan on a certain percentage of their FD principal amount at a very low interest rate.
Premature withdrawals – In an emergency, you can withdraw the FD amount before it expires. Also, some banks may not charge a fee for this facility, especially for the elderly.
Benefits of Fixed Deposits for Seniors
- The senior fixed deposit offers higher interest rates, with better returns compared to other age groups. The rate is 0.25% to 0.65% higher than the normal rate.
- The duration of the investment can range from 7 days to 10/20 years.
- For fixed deposit investments with a lock-in period of 5 years, the elderly can benefit from tax advantages under section 80C of the Income Tax Act.
- Interest is calculated on a compound quarterly basis. However, some banks may even follow a semi-annual or annual interest credit system.
- The highest FD rates of interest are offered to seniors. This makes it a very lucrative investment operation for the older generations to support them in the later stages of their lives.
Eligibility of seniors for FD
People aged 60 or over are eligible to open a FD as part of the seniors group.
However, some banks have a super senior bracket for people over 80. They are offered additional interest rate benefits, in addition to other categories of senior citizens and ordinary citizens.
How to open a FD for seniors
You can open an FD by visiting the bank or online at the bank’s website.
- Fill out the online form.
- Upload the required documents and proof of identity with the application form
- The amount is usually debited from the applicant’s savings account with the bank.
- Seniors can choose to get interest amount monthly, quarterly or annually.
To open a FD with the post office, the senior must go to the post office, fill out the form and deposit the investment amount / money through a check or sight draft .
Before booking a fixed deposit for seniors, check the rates offered by different financial institutions and banks and choose the one that proves the most lucrative in terms of interest rate, tax benefits and other additional features.