SCSS+POMIS: How senior citizens can get a guaranteed ₹26,050/month income

Senior citizens, as a relatively conservative investor class, prefer highly safe investments that offer steady returns without the risk of capital erosion. If you are completely risk-averse and are looking for investment avenues that earn decent returns, you can park your money in government-backed small saving schemes.

Supposing you have a lump sum amount of ₹39 lakh, you can consider channelising funds across Senior Citizens Savings Scheme (SCSS) and Post Office Monthly Income Scheme (POMIS) for getting ₹26,050 per month.

If you split the lump sum amount of ₹39 lakh across the two schemes, such that you put the maximum allowed amount of ₹30 lakh in SCSS and the remaining ₹9 lakh in POMIS, you will be able to rake in ₹26,050 per month.

The SCSS is currently offering 8.2% interest per annum. Investing ₹30 lakh in SCSS at this rate will yield a total interest income of ₹12.3 lakh. This is calculated using the simple formula:

PxRxT/100; where P stands for principal amount, R for rate of interest and T for tenure which here is 5 years. Considering this, the annual interest amount comes to be ₹2,46,000 and quarterly interest is ₹61,500. This means investors can get a guaranteed monthly income of ₹20,500 from SCSS.

By investing the remaining ₹9 lakh in the Post Office MIS, investors will be able to realise a guaranteed monthly income of ₹5,550.

So, your investment in both the schemes, will garner a handsome monthly combined income of ₹26,050.

Both the instruments are government-backed small savings schemes offering steady and guaranteed returns.

Senior Citizen Savings Scheme (SCSS)

Eligibility: For opening the account, you need to be a resident citizen of India, having attained the age of 60 years. Also, you can open an account in case you are 55 years or more but less than 60 years, and have retired on superannuation or otherwise.

1. Minimum and maximum investment limits: Investors can invest a minimum sum of ₹1000 and a maximum amount of ₹30 lakh.
2. Interest payment and frequency: The government after quarterly review decides interest rate on the scheme. Currently, the rate offered is 8.2% and is payable quarterly with payment being credited on 1st April, 1st July, 1st October and 1st January.
3. Tenure: The scheme is available with a standard maturity tenure of 5 years. The subscriber can extend the account, any number of times, for a further block period of 3 years within a period of one year from the date of maturity or from the date of the end of each block period of three years by submitting the prescribed form at the concerned Post Office.

Post Office MIS

1. Eligibility: Resident adults can open the account either singly or jointly.
2. Minimum and maximum investment limit: A minimum of ₹1000 can be put in the scheme, with the maximum limit set at ₹9 lakh in a single account and ₹15 lakh in a joint account.
3. Interest payment: The scheme pays 7.4% per annum interest rate that remains fixed for the entire 5-year term. As the scheme’s name suggests, the investment offers an assured monthly income payout for the entire term.
4. Premature withdrawal: Not allowed before the expiry of 1 year from the date of opening of such account.