Category: Retirement Planning

Pre and Post Retirement Investment Options.

Pre and Post Retirement Investment Options.

Exploring Pre and Post-Retirement Investment Options

As individuals journey through life, the prospect of retirement looms on the horizon, making it essential to consider various investment options that can provide financial security during their golden years. In this article, we will discuss a range of pre and post-retirement investment choices, each offering unique features and benefits.

Pre-Retirement Investment Options

New Pension Scheme (NPS)

The New Pension Scheme is a valuable pre-retirement investment option available to all, with a mandatory provision for government employees. Some key features include a minimum monthly deposit of INR 500 or INR 6000 annually. Although withdrawals are not directly tax-exempt, the amount becomes tax-free as per the Tax Act, 1961. This government-backed scheme offers a secure investment opportunity.


Bonds are among the most popular pre-retirement investment options. These debt securities involve an initial payment by the holder to the issuer, with periodic interest payments and principal repayment upon maturity. Bonds typically offer competitive interest rates ranging from 10-20% annually and are tax-free at the time of investment.

Non-Convertible Debentures (NCDs)

Non-Convertible Debentures, issued by high-rated companies, provide fixed-income investments with specific terms and interest income. NCDs can yield higher returns, around 8-9%, particularly benefiting investors in the 10% and 20% tax brackets.

Exchange Traded Funds (ETFs)

Exchange Traded Funds operate much like mutual funds, but they can be traded on stock exchanges throughout the trading period. ETFs offer a means to diversify your portfolio with assets like commodities, bonds, or stocks.

Equity Funds

Equity funds serve as ideal pre-retirement investments, primarily for long-term goals. These mutual funds focus on stock investments, offering the potential to participate in a company's growth. They are regulated by SEBI to safeguard investors' funds.

Real Estate

Real estate investments, such as properties like houses or shops, are highly favored among pre-retirees. A wise choice of location is crucial for stable returns.

Post-Retirement Investment Options

Systematic Withdrawal Plan (SWP)

The Systematic Withdrawal Plan is a common choice for retirees looking to supplement their income. It enables the regular withdrawal of a fixed amount by redeeming mutual fund units.

Dividend Payout

Retirees often opt for the dividend option, which provides intermittent cash flows. In mutual fund schemes, dividends are tax-free in the hands of investors. However, in debt funds, the fund house pays a dividend distribution tax of 28.84%.


An annuity is a retirement product that guarantees pension payments for life. There are various pension options, and life insurance companies offer annuity plans.

Senior Citizen Saving Schemes (SCSS)

Designed for individuals aged 60 and above, SCSS accounts have a five-year tenure, which can be extended by three years. The maximum investment limit is INR 15 lakhs, and the scheme is eligible for tax benefits under Section 80C.

Post Office Monthly Income Scheme (POMIS)

POMIS is a monthly income scheme that provides guaranteed regular income. It offers flexible investment options and is subject to taxation.

Reverse Mortgage

A reverse mortgage is a suitable post-retirement option, allowing senior citizens to receive a steady income by mortgaging their homes.

Bank Fixed Deposits (FDs)

Bank FDs are a popular choice for retirees due to their safety and fixed returns. They offer flexibility in terms of tenure and are eligible for Section 80C tax benefits.

Tax-Free Bonds

While not currently available in the primary market, tax-free bonds may be a valuable addition to a retiree's portfolio. They are typically issued by government-backed institutions, offering long-term, tax-free returns.

In conclusion, retirement planning varies for each individual based on their needs, requirements, and risk tolerance. To achieve financial security during retirement, a combination of these diverse investment options is often recommended. By gaining in-depth knowledge about these options, individuals can make informed choices to ensure a prosperous and peaceful retirement.