Should I invest in Senior Citizens Savings Scheme (SCSS) or a bank FD after retirement?

Want to choose between the Senior Citizens’ Savings Scheme (SCSS) and a senior citizen bank fixed deposit (FD) after retirement? Well, if you value maximum safety and a guaranteed return, SCSS is likely a strong contender.

On the other hand, if you prefer flexibility in terms, payout frequency, senior citizen FDs can make sense. Some small finance banks, are offering rates above 8% to senior citizens.

According to Jain, retirees should choose SCSS over bank FDs.

HDFC Bank provides an interest rate of 7.10% for deposits with a tenure of 18 to 21 months. ICICI Bank also offers 7.10% interest on FDs with a tenure ranging between 2 to 10 years. Kotak Mahindra Bank gives a maximum return of 7.10% on term deposits of 23 months. Federal Bank offers one of the highest rates, 7.20%, on deposits for 999 days

Among public sector banks, State Bank of India (SBI) provides 6.95% for deposits of 2 to 3 years, while Union Bank of India offers 6.60% for a 3-year tenure. Punjab National Bank (PNB) gives 7.10% interest on FDs with a 390-day tenure, and Canara Bank offers 7% on deposits for 444 days.

3)Both options provide capital protection, but SCSS is backed by the Government of India, offering slightly higher safety compared to FDs, which are insured only up to ₹5 lakh per bank under the DICGC scheme.

4)From a tax perspective, both investments have taxable interest income, but SCSS has an added advantage: deposits of up to ₹1.5 lakh qualify for deduction under Section 80C.

You can also claim a tax deduction of up to ₹1.5 lakh per financial year under Section 80C of the Income Tax Act by investing in a 5-year tax-saving FD.