SCSS Calculator: How Senior Citizens Couple Can Generate Rs 40,000 Monthly Income?

Senior Citizen Savings Scheme (SCSS) is a popular government-backed small savings scheme especially curated for the golden years of senior citizens. An individual over the age of 60 can establish a SCSS account by depositing a minimum of Rs. 1000 and in multiples of Rs. 1000, subject to a cumulative maximum of Rs. 30 lakh in all SCSS accounts, whether jointly or individually. SCSS promises an annual interest rate of 8.2% payable on a quarterly basis for Q1FY24. The SCSS has a 5-year tenure, but when it matures, the account holder may extend it for a further 3 years from the date of maturity within a year. Senior Citizen Savings Scheme (SCSS) accounts can offer a monthly income of Rs 40,000 for senior citizen couple who maintain their account jointly, here's how.

Tanvi Kanchan, Head - Corporate Strategy, Anand Rathi Shares and Stock Brokers

A Senior Citizens' Saving Scheme (SCSS) is a government-backed retirement benefits programme which offers an individual over 60 years of age to invest In SCSS, the instalment amount ranges between 1000 - 15,00,000. Individuals should deposit in the Senior Citizen Scheme account within a month from receiving retirement benefits from their employer and the interest rate is 8.2% pa. (Q1 FY 23-24). The Tenure is 5 years with an option to extend it for 3 more years, this scheme gives regular income option along with tax benefit.

So if a senior citizen couple deposits Rs 30 lakh each in their separate SCSS accounts, they will be able to get a combined quarterly interest income of ~Rs.1,23,000, which is equivalent to ~Rs 41,000 monthly income.

Armaan Joshi, Lead Editor, Forbes Advisor India

The Senior Citizens Savings Scheme is a sovereign-backed savings scheme that helps senior citizens of India above the age of 60 years to earn a secured interest on their savings aimed at retirement planning.This scheme, which has a lock-in of five years, can help senior citizens generate a monthly income of INR 40,000, thanks to the extension to the maximum deposit for SCSS to INR 30 lakh from INR 15 lakh announced in the Budget 2023-24 by Finance Minister Nirmala Sitharaman.

The calculation via a SCSS calculator reveals simple interest income generation for this one-time deposit scheme: When individual deposits to the tune of a minimum INR 30 lakh is made by both the partners, an interest rate of INR 60,000 can be earned individually per quarter if the rate of interest of 8% is taken into account. Considering a quarter has three months, the monthly income generated will collectively become INR 40,000. After five years, the account holder can extend the scheme by another 3 years ensuring a sustained and stable monthly income.

Bhuvanaa Shreeram, Co-Founder & Head of Financial Planning, House of Alpha

The Senior Citizen Savings Scheme (SCSS) is a government-backed savings instrument designed for elderly individuals seeking regular income, offering an 8.2% interest rate. Couples can invest up to Rs 15 lakh, earning Rs. 2.46 lakhs annually or Rs. 61,500 per quarter. However, solely depending on SCSS for a monthly income of Rs. 40,000 might be insufficient. Alternatives include interest from Fixed Deposits in banks or corporates, Annuity plans from insurance companies, or Systematic Withdrawal Plans from mutual funds for generating regular income. Diversifying investments can enhance prospects of meeting their income goal.

Aryaman Vir, CEO of Aurum WiseX

To generate a monthly income, a senior citizen couple can utilize a well-balanced investment strategy. The principle is to calculate the equity exposure by subtracting your age from 100.

Take, for instance, a couple aged 60, possessing a retirement corpus of INR 1 Crore. They can consider allocating INR 60 lakhs of the corpus towards fixed return investments. These investments could be divided equally between the Senior Citizen Savings Scheme (SCSS) and structured debt opportunities.

For the SCSS, an investment of INR 30 lakhs would be recommended. Given that this scheme, regarded as a safe investment, offers around 8.2% per annum, it can generate approximately INR 2.46 lakhs per year.

Parallelly, the same amount, INR 30 lakhs, can be invested in structured debt opportunities. These opportunities, owing to their curated nature, can provide higher returns, approximately 12% per annum, resulting in an annual income of around INR 3.6 lakhs.

When you combine the annual incomes from both these investments, the total reaches around INR 6.06 lakhs. On dividing this by 12, the monthly income becomes approximately INR 50,500.

It's worth noting, though, that while SCSS offers fixed returns, they barely outpace inflation. On the other hand, structured debt opportunities, when managed properly, can provide consistent and higher returns.

Financial landscapes and market conditions are ever-evolving, making it essential to frequently review and adjust your financial plan. This ensures that the plan continues to serve your needs effectively. Enlisting the help of a financial advisor can prove advantageous, assisting you in making strategic and informed financial decisions.

Viplav Majumdar, Founder, planyourworld.com

Senior citizens must realize that sustaining a lifestyle with an expenditure of 40k today will require 42.8k per month for the next year, Rs. 45.7k for the third year, 49k for the fourth year, and 52.4k for the fifth year. This cost will continue to rise indefinitely with inflation. It is crucial for the couple to use this as a parameter while selecting any investment scheme to generate income.

In India, there are limited options for meaningful growing pensions, so the couple should consider the Senior Citizen's Savings Scheme as it offers the highest interest with safety. To bridge the gap in the required income, they should consider investing 10% to 30% of their savings in equities. The most critical aspect is to ensure a positive return after adjusting for Income Tax and inflation. For instance, if they fall under the 20% tax bracket and the interest rate is 8%, their post-tax return will be 6.4%. However, if inflation is at 7%, they will be making a negative return.

It is essential for people to plan their income year on year, ensuring that they do not need to compromise their lifestyle due to rising expenses and a decrease in income. By carefully managing their investments and considering the impact of inflation and taxes, senior citizens can secure a stable and fulfilling financial future.

Shruti Jain, CSO, Arihant Capital Markets Ltd

The Senior Citizen Savings Scheme (SCSS) is a government-backed retirement benefit program designed specifically for individuals aged 60 years and above. This scheme, launched by the Government of India in 2004, intends to provide older individuals with a consistent and stable source of income during their post-retirement years.

The key features of SCSS make it an attractive investment option for seniors seeking steady returns and financial stability:

Interest Rate: SCSS offers attractive interest rates revised quarterly based on market conditions. The current Q2 (July-September) FY 2023-24 rate is 8.2% p.a.

Deposit Amount: SCSS allows deposits from Rs 1,000 to Rs 30 lakhs, catering to diverse investment levels.

Maturity Period: SCSS accounts mature after 5 years, but investors can extend them for an additional 3 years for continued returns.

Interest Payment: Senior citizens earn quarterly interest on their deposits, credited on the first of April, July, October, and January.

Now, let's explore how a senior citizen couple can generate a monthly income of Rs 40,000 through SCSS:

Thus, if a senior couple contributes Rs. 30 lakhs each to their SCSS accounts, they can get a combined quarterly interest income of Rs 1,23,000 (Rs 61,500×2), equivalent to Rs 41,000 monthly payment.

SCSS ensures a reliable income source for seniors, offering attractive interest rates and government-backed security, making it a prudent choice for a financially stable post-retirement life. With SCSS, senior citizens can secure their future and enjoy a monthly income of Rs 40,000 or more, ensuring a comfortable retirement.

Suman Bannerjee, CIO, Hedonova, a US based Hedge Fund

By depositing Rs 30 lakh each in separate SCSS accounts, a senior citizen couple can generate a monthly income of Rs 40,000. The interest earned at the current rate of 8% will give them a combined quarterly income of Rs 1,20,000.

Satyen Kothari founder and CEO of Cube Wealth

If a senior citizen couple individually invests Rs 30 lakh in their SCSS accounts, they will receive a total quarterly interest income of Rs 1,20,000 (Rs 60,000×2), which is equivalent to a monthly income of Rs 40,000.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.