When regular income ceases, investments serve as a "monthly pension." Therefore, it's important to make a wise decision after retirement. Currently, two options are most discussed:

Senior Citizens Savings Scheme (SCSS)

Senior Citizen Fixed Deposit (FD)

Let's understand both in simple terms.

What is SCSS?

The Senior Citizens Savings Scheme (SCSS) is a special scheme of the Central Government, designed for people aged 60 years and above. Its key features:

Interest rate: 8.2% per annum (current)

Term: 5 years (3-year extension possible)

Maximum investment: ₹30 lakh

Interest payment: Every three months

Tax exemption up to ₹1.5 lakh under Section 80C

This scheme is fully guaranteed by the Government of India. Therefore, it is considered extremely safe.

What are the benefits of a Senior Citizen FD?

Senior Citizen FDs can be opened with any bank. They offer 0.25% to 0.75% higher interest rates than regular FDs. Some major banks offer interest rates around 7.10% for senior citizens. Small finance banks offer interest rates around 8%.

SCSS vs FD: Comparison at a Glance

Basic SCSS Senior FD

Interest Rate 8.2% (Fixed) 6.5%–8% (Depending on Bank)

Guarantee: Government of India DICGC Insurance up to ₹5 lakh

Term 5 years (3 years extension), 7 days to 10 years

Tax Benefits: 80C exemption only for 5-year tax FDs

Interest Payments: Quarterly/Monthly/Quarterly/Maturity

Where is the greater security?

Investments in SCSS are fully backed by the government. In FDs, DICGC insurance only covers up to ₹5 lakh. If a retired individual wants to invest ₹20-25 lakh, SCSS would be a relatively safe option.

Understand the tax math.

Investing in SCSS provides a tax deduction of up to ₹1.5 lakh under Section 80C. However, the interest is fully taxable.

Interest on FDs is also taxable. However, only 5-year tax-saving FDs are eligible for Section 80C benefits. This is not the case with other FDs.

Who should choose which?

SCSS is better if:

You are 60+

Want secure income for the long term

Need regular quarterly interest

Also want tax savings

FD is better if:

You need a flexible tenure

Want to withdraw money at any time

Want to invest in small installments

Have faith in a particular bank

Balance is wise

"Complete security" and "regular income" should be the top priorities when investing after retirement. SCSS appears to have a slight edge in this regard. But investing the entire amount in one place is not wise.

The best approach may be to invest a portion of the money in SCSS and the rest in FDs. This way, you'll have both security and flexibility.

What does this mean for you?

SCSS offers greater security and better returns, while FDs offer more flexibility. A balanced investment strategy, based on your expenses, age, and needs, is the right strategy.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.